ADVFN Morning London Market Report: Monday 2 December 2019

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London open: Miners pace the gains after China manufacturing data

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London stocks rose in early trade on Monday, with miners pacing the gains as investors welcomed the release of encouraging Chinese manufacturing data.

At 0830 GMT, the FTSE 100 was up 0.4% at 7,374.19, while the pound was flat against the dollar at 1.2920 and 0.1% lower versus the euro at 1.1726.

According to a private survey released earlier, the Chinese manufacturing sector expanded at its fastest pace in three years last month.

The Caixin Markit manufacturing purchasing managers’ index rose to 51.8 in November from 51.7 in October, marking its fastest expansion since December 2016 and beating expectations for a reading of 51.4.

Meanwhile, the official manufacturing PMI released at the weekend showed a return to growth for the first time in seven months. The PMI ticked up to 50.2 in November from 49.3 the month before, coming in above the 50.0 level that separates contraction from expansion. This followed six consecutive months below 50.0 and was ahead of expectations for a reading of 49.5.

ING economist Iris Pang said: “We expected some improvement in domestic new orders, but the data has surprised us by coming earlier than our expectations. One of the major pushes of new orders is that infrastructure investment has moved from the investment stage to the production stage. This will continue to give support to new orders in the coming year.”

In UK equity markets, miners were the standout gainers, with Rio Tinto, Glencore, BHP, Anglo American and Antofagasta all higher after the better-than-expected Chinese data. Rio and Glencore were also boosted by rating upgrades at RBC Capital Markets.

Elsewhere, Unilever ticked higher after an upgrade to ‘buy’ at Liberum.

On the downside, online grocer Ocado was in the red after saying it had launched a £500m bond issue to fund capital expenditure in relation to its Ocado Solutions commitments and general corporate purposes.

Precious metals miner Fresnillo lost its shine after narrowing its 2019 outlook for gold and silver.

TUI was in the red after a downgrade to ‘market perform’ at Bernstein, while Land Securities and Derwent London lost ground after downgrades at JPMorgan.

Outside the FTSE 350, fashion retailer Ted Baker was under the cosh after saying that it had overstated the value of the inventory on its balance sheet by up to £25m and will carry out a review of the issue.

 

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