LONDON (Alliance News) - London stock indices closed mixed Monday in response to contrasting economic data from the world's two largest economies, the US and China, while the UK manufacturing sector also grew by less than expected.
The FTSE 100 closed down 0.4% at 6,953.58, but the FTSE 250 rose 0.4% at 18,220.20 and the AIM All-Share index closed up 0.4% at 775.83.
In Europe the CAC 40 in Paris ended up 0.4%, while the DAX 30 in Frankfurt closed up 0.2%.
At the close of London equity markets, the DJIA and S&P 500 indices were both reading flat, and the Nasdaq Composite was up 0.1%.
The US dollar rose back against its major trading partners, as the ISM manufacturing index for May and construction spending for April climbed by more than expected.
According to the Institute for Supply Management, the manufacturing purchasing managers index for the US climbed to 52.8 in May from 51.5 in April, with a reading above 50 indicating growth in manufacturing. Economists had expected the index to inch up to just 51.8.
Meanwhile, a report from the Commerce Department showed that US construction spending surged by 2.2% to an annual rate of USD1.006 trillion in April from the revised March estimate of USD984.0 billion. Economists had expected construction spending to rise by just 0.7%.
However, there was some disappointment in the US data, with personal spending coming in unchanged in April from an upwardly revised 0.5% expansion in March. Economists had expected another 0.2% rise. Nevertheless, US personal income rose by 0.4% in April after inching up by less than a tenth of a percent in March. It surpassed consensus estimates of a 0.3% rise.
"Where does this leave the Fed? Likely just as confused as it has been for the past few months," said Connor Campbell, financial analyst at Spreadex. "The consistent inconsistency in US figures remains a problem. Whilst data has begun to err on the side of the positive, it still isn’t showing the kind of robust growth the Fed has claimed it needs to see."
At the London close, the pound traded the dollar at USD1.5175, while the euro traded at USD1.0895.
The FTSE 100 initially rose alongside the dollar following the positive data, but soon slipped further into losses.
Miners weighed upon the UK's main stock indices for most of the day after a report showing the manufacturing sector in China continued to contract in May. The latest manufacturing PMI reading from HSBC Bank showed a score of 49.2. That was in line with expectations, and it represented a slight upward revision from last month's flash estimate reading of 49.1. It also was up from 48.9 in April, but it remains beneath the line of 50 that separates expansion from contraction in a sector.
Anglo American closed down 1.7%, Glencore down 1.4% and BHP Billiton down 1.3%.
The UK manufacturing sector also grew by less than forecast in May, data from CIPS and Markit economics showed. The report said that the seasonally adjusted purchasing manager's index climbed to 52.0 in May, slightly down from expectations for a reading of 52.8. The April reading was revised down to 51.8.
Outside the London mining sector, Lloyds Banking Group closed up 0.9%. UK Financial Investments said it has extended by a further six months the trading plan under which it is selling the UK government's stake in Lloyds back to the market. The government also said a further 1% stake in the bank has been sold, taking its stake down to 18.99%.
The UK government confirmed that Lloyds shares will be sold to retail investors "in the next 12 months". Further details will be set out in due course, it added.
Ultra Electronics Holdings ended up 2.4% as it said it has struck a deal to acquire the electronics products division of US-based radio frequency and microwave systems supplier Kratos Defense & Security Solutions for USD265 million. Brokers Liberum and Investec both like the deal, with Liberum saying it sees a "strong strategic rationale" behind the acquisition.
Having spent most of the day amongst the biggest fallers in the FTSE 250, Playtech shares closed down 1.7%. The gaming software development company said it has reached an agreement to acquire troubled contracts-for-difference trading platform Plus500 in a GBP459.6 million deal.
Playtech, which has recently moved into the foreign exchange trading sector, will pay 400 pence per share for Plus500. Plus500, whose shares have been under pressure since the company had to suspend some of its UK customer accounts to address its anti-money laundering processes, closed up 2.2% at 377.95p.
In the AIM All-Share index, Sunrise Resources closed up 33% as the best performer. The company said it will refocus its drilling programme at the Bay State silver project in the US state of Nevada onto the Chihuahua vein after the latest test results produced "bonanza" silver grades.
China New Energy added 28% after it bought a 24% stake in a Hungarian bioethanol project for EUR250,000, and said it could increase its stake further.
In the economic calendar Tuesday, German unemployment data are scheduled for 0855 BST, UK net lending and mortgage approvals are at 0930 BST as is UK construction purchasing managers' index. Later in the morning is eurozone inflation at 1000 BST, and US factory orders are at 1500 BST.
In the UK corporate calendar, there are full-year results from LondonMetric Property, Synergy Health and AO World. Building materials company Wolseley issues a third-quarter interim management statement, and oil services company AMEC Foster Wheeler issues a trading statement.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
Copyright 2015 Alliance News Limited. All Rights Reserved.
30 Oct 2015 10:55
