Date: Monday 03 Sep 2012
- ECB to meet Thursday, all eyes on Draghi
- Chinese data disappoints, prompts expectations for stimulus
- Glencore/Xstrata merger at risk ahead of vote
UK stocks were making strong gains on Monday morning with miners leading the way as investors showed optimism that central bankers will act to boost the global economy over the coming weeks.
According to a monthly survey by HSBC, the China manufacturing purchasing managers' index (PMI) dropped from 49.3 in July to 47.6 in August, its lowest reading since March 2009. The news follows the official PMI data from last week which fell to a nine-month low of 49.2. Any figure below 50 indicates a contraction.
"However, like all negative data releases from China over the past few weeks, the report raised the calls for more easing measures by the country’s central bank who admittedly have plenty of room to act in order to stimulate growth," said Ishaq Siddiqi, a market strategist from ETX Capital.
The UK's own manufacturing data beat expectations last in August, though it still posted its fourth straight month of contraction. The manufacturing PMI rose to 49.5, from 45.2 in July, a four-month high and better than the 46 reading expected by analysts.
Nevertheless, the focus of the markets this week will undoubtedly be on the European Central Bank (ECB) monetary policy meeting on Thursday at which President Mario Draghi is widely expected to unveil plans for buying sovereign debt in order to bring down bond yields in peripheral nations.
Following on from last week's climax of the Federal Reserve Chairman Ben Bernanke's closely watched speech at the Jackson Hole symposium, markets widely believe that further quantitative easing (QE) is now on the cards for the central bank's next meeting on September 13th and 14th.
However, investors will be keeping a close eye on payrolls and manufacturing data due out this week as any decent figures could ease the Fed's concerns about the economy, delaying (or even preventing) any action. Markets in the US will be closed today due to the Labour Day holiday.
Hopes that Chinese policy makers will act to prevent a significant slowdown in the world's second-largest economy were driving gains in the mining sector today: Fresnillo, Vedanta, Kazakhmys, Antofagasta, Evraz, BHP Billiton, Rio Tinto, Randgold Resources and Anglo American were among the best performers.
However, Glencore was bucking the trend on the back of rumours that it will be sticking to its original offer for mining group Xstrata in spite of growing opposition to the terms. Qatar Holdings, which owns around 12% of the group, confirmed last week that it would vote against the merger at the shareholder meeting on Friday.
Oil giant Shell was in demand after announcing the sale of some of its Nigerian assets for $102m. The company says the divestment of its 30% interest in Oil Mining Lease 40 in the Niger Delta is part of a strategy to “refocus its onshore interests”.
Chip group ARM Holdings was a heavy faller on the FTSE 100 after Deutsche Bank downgraded its recommendation to 'sell'. Supermarket firm Morrisons was in the red after Nomura cut its rating to 'neutral'.
Finnish zinc and nickel mining company Talvivaara was a high riser after it denied it will be cutting jobs as part of a cost savings plan. Rumours had been circulating that the low price of nickel would force a reduction in headcount.
Africa-focused oil group Ophir Energy rose after significantly upping estimates of potential resources at one of its sites in Tanzania.
Home Retail was making gains after Investec upgraded its rating on the stock from 'sell' to 'buy', saying that shares should react positively "to evidence of more resilient trading at Argos" after the group's second-quarter trading update next week.
FTSE 100 - Risers
Fresnillo (FRES) 1,636.00p +4.80%
Vedanta Resources (VED) 901.00p +3.86%
Kazakhmys (KAZ) 609.50p +2.78%
Antofagasta (ANTO) 1,135.00p +2.53%
Rio Tinto (RIO) 2,794.00p +2.14%
Evraz (EVR) 229.70p +2.09%
Randgold Resources Ltd. (RRS) 6,450.00p +2.06%
Sage Group (SGE) 302.20p +2.03%
BHP Billiton (BLT) 1,872.00p +1.96%
Wolseley (WOS) 2,589.00p +1.85%
FTSE 100 - Fallers
Admiral Group (ADM) 1,141.00p -3.79%
ARM Holdings (ARM) 560.50p -2.35%
Glencore International (GLEN) 381.60p -0.90%
Morrison (Wm) Supermarkets (MRW) 277.80p -0.79%
Royal Bank of Scotland Group (RBS) 224.90p -0.62%
Ashmore Group (ASHM) 327.40p -0.49%
ICAP (IAP) 316.20p -0.47%
Kingfisher (KGF) 274.40p -0.44%
AstraZeneca (AZN) 2,923.50p -0.44%
Whitbread (WTB) 2,124.00p -0.28%
FTSE 250 - Risers
Talvivaara Mining Company (TALV) 133.30p +6.30%
Ophir Energy (OPHR) 591.50p +4.78%
Hochschild Mining (HOC) 452.40p +4.60%
Centamin (DI) (CEY) 83.10p +4.53%
Bovis Homes Group (BVS) 492.50p +4.08%
Dixons Retail (DXNS) 18.26p +4.05%
Taylor Wimpey (TW.) 53.15p +3.71%
Paragon Group Of Companies (PAG) 196.00p +3.65%
Barratt Developments (BDEV) 155.40p +3.60%
Persimmon (PSN) 721.50p +3.37%
FTSE 250 - Fallers
Cape (CIU) 234.40p -3.30%
Bumi (BUMI) 308.30p -3.05%
Ferrexpo (FXPO) 157.20p -2.78%
Henderson Group (HGG) 103.40p -2.54%
CSR (CSR) 317.40p -2.52%
ITE Group (ITE) 198.40p -2.17%
Ruspetro (RPO) 124.10p -2.13%
PayPoint (PAY) 704.00p -1.81%
Menzies(John) (MNZS) 619.00p -1.75%
BH Global Ltd. USD Shares (BHGU) 11.35 -1.65%
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