FTSE 100 up after two days of losses as solid China data lifts energy, mining stocks
London’s FTSE 100 rose on Friday after two straight days of losses as a jump in China’s factory output for the first time in 2020 powered miners and oil and gas producers, while investors remained cautious about a loomingcoronavirus-fueled recession.
The commodity-heavy FTSE 100 was up 1.5 percent, with BP Plc and Royal Dutch Shell Plc providing the biggest boost. Miners including Rio Tinto, Glencore and BHP Group jumped between 3.8 percent and 4.5 percent.
The mid-cap FTSE 250 also rose 1.5 percentw ith data showing China’s industrial production climbed a faster-than-expected 3.9 percent in April as the country returned to work after months of coronavirus-induced lockdowns.
Still, both benchmark indices are on track for their first weekly slump in three as millions of job losses globally and growing US-China tensions crush consumer demand. US President Donald Trump said on Thursday he had no interest in speaking to his Chinese counterpart right now.
“We’re in a volatile holding pattern here after the very significant bump since March,” said Willem Sels, global chief market strategist at HSBC Global Private Banking.
“We can explain most of that by government and central bank intervention that has almost eliminated the risk of a credit crisis. But we do think that some of the asset price inflation, with price/earnings ratios moving to new highs is exaggerated.”
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UK stocks have struggled to build on a strong April rally this month as investors face worsening economic indicators and central banks signal a longer-than-expected road to recovery.
A survey on Friday showed three-quarters of British manufacturers did not think business will be back to normal within six months, while HSBC further cut global GDP forecasts amid fears that easing lockdowns would lead to a second wave of coronavirus infections.
“It’s a slower rebound in Q3 and Q4 that’s driving the downgrade,” HSBC’s Sels said.
“Typically, what economists do when they downgrade 2020 is that they would upgrade 2021 in terms of speed of growth. But this has not really happened - that also tells you the expectations for a recovery.”
A week after investors began betting on negative US interest rates, Bank of England Governor Andrew Bailey said the UK’s central bank was not considering taking rates below zero, although he declined to rule it out altogether.
William Hill became the latest company to post a plunge in revenue as sports betting volumes collapsed and it was forced to close its retail network of betting shops. But shares jumped 10.1 percent amid the broader rally.
Battered cruise operator Carnival Corp surged 8.0 percent to the top of the FTSE 100 after saying it was cutting 820 positions out of a workforce of roughly 3,000 employees in Florida as the future of the industry remains uncertain amid no-sail orders due to the COVID-19 pandemic.
BT Group Plc jumped 7.2 percent as a report said it was in talks to sell a multi-billion pound stake in its wholly owned network subsidiary, Openreach, to infrastructure investors to help fund an ambitious expansion in fiber broadband.