London close: Stocks finish higher despite weak PMI

(Sharecast News) - London stocks finished in the green on Wednesday, as investors brushed aside news that the UK's post-lockdown recovery was losing steam.
The FTSE 100 ended the session up 1.2% at 5,899.26, and the FTSE 250 was ahead 1.02% at 16,992.99.

Sterling was stronger against its major trading pairs, rising 0.24% on the dollar to $1.2764, and advancing 0.48% against the euro to €1.0927.

"Stocks were driving higher in the first few hours of trading but things have faded a little recently," said CMC Markets analyst David Madden.

"The slightly negative beginning to the US trading session seems to have taken some of the wind out of the bull's sails in Europe.

"In London, airlines, hospitality, bank, and supermarkets stocks are all showing solid gains, [while] mining stocks like Antofagasta and Glencore are in the red because of the negative moves seen in metals."

Market participants largely shrugged off the latest survey from IHS Markit/CIPS, which showed the flash composite purchasing managers' index for the UK - which measures activity in the services and manufacturing sectors - fell to 55.7 from August's six-year high of 59.1.

That was below consensus expectations of 56.1.

Meanwhile, the services PMI declined to 55.1 from 58.8, missing expectations of 55.9.

The manufacturing PMI printed at 54.3 for September, down from 55.2 but a touch ahead of expectations for a reading of 54.0.

A reading above 50.0 indicates expansion, while a reading below signals contraction.

The survey also showed that jobs continued to be cut at a fierce rate in September as firms looked to reduce costs amid weak demand.

"The UK economy lost some of its bounce in September, as the initial rebound from Covid-19 lockdowns showed signs of fading," said Chris Williamson, chief business economist at IHS Markit.

"It was not surprising to see that the slowdown was especially acute in services, where the restaurant sector in particular saw demand fall sharply as the Eat Out to Help Out scheme was withdrawn."

Thomas Pugh, UK economist at Capital Economics said the drop in the composite flash PMI suggests the recovery has already started to flatten out.

"And reinstating restrictions on business opening hours and encouraging people to work from home again could cause the recovery to stall completely in the fourth quarter," he said.

"Indeed, it now seems likely that the UK restrictions will set back the economic recovery and cause GDP to stagnate in Q4."

Pugh added that the "big risk" was that the government needed to go further.

"For example, a two-week national lockdown could reduce the level of GDP by 5% and set back the economic recovery by a year."

In equity markets, engine maker Rolls-Royce was up 1.06% and GKN owner Melrose Industries added 2.12%, both having fallen heavily at the start of the week on concerns about the impact of Covid-19 and tighter restrictions.

JD Sports Fashion rallied 3.83% following well-received first-quarter results from Nike.

Diploma surged 26.94% after raising around £190m in a placing to help fund the £357m acquisition of US-based wire and cable distributor Windy City Wire Cable and Technology Products, and following an upgrade to 'overweight' at JPMorgan.

The bank said Diploma was buying a good business at a reasonable price.

Upper Crust and Caffe Ritazza owner SSP Group was 12.34% firmer, despite warning of "considerable" job losses and saying it expects second-half sales to plummet by 86% amid the coronavirus pandemic.

3i Group advanced 1.67% after saying results at its Action discount retail business beat expectations in the past three months as the private equity investor reported mixed trading at its other portfolio businesses.

On the downside, precious metals miners Fresnillo, Polymetal and Hochschild lost 5.75%, 1.5% and 5.65%, respectively, as gold prices fell.

PZ Cussons retreated 2.33% as it said it had a good start to the current financial year but that it expected tougher trading with the UK and other markets in recession.

Market Movers

FTSE 100 (UKX) 5,899.26 1.20%
FTSE 250 (MCX) 16,992.99 1.02%
techMARK (TASX) 3,755.62 1.06%

FTSE 100 - Risers

GVC Holdings (GVC) 887.40p 4.06%
JD Sports Fashion (JD.) 792.20p 3.83%
Smith (DS) (SMDS) 280.70p 3.54%
Flutter Entertainment (FLTR) 12,020.00p 3.49%
Ferguson (FERG) 7,526.00p 3.42%
Mondi (MNDI) 1,562.50p 3.19%
B&M European Value Retail S.A. (DI) (BME) 473.00p 2.98%
Prudential (PRU) 1,106.50p 2.98%
Avast (AVST) 528.00p 2.92%
Hargreaves Lansdown (HL.) 1,615.50p 2.87%

FTSE 100 - Fallers

Fresnillo (FRES) 1,204.50p -5.75%
BT Group (BT.A) 101.70p -1.69%
Antofagasta (ANTO) 1,046.00p -1.51%
Polymetal International (POLY) 1,674.00p -1.50%
International Consolidated Airlines Group SA (CDI) (IAG) 100.60p -1.37%
Land Securities Group (LAND) 499.95p -1.18%
BP (BP.) 239.50p -1.16%
Tesco (TSCO) 223.80p -0.93%
Glencore (GLEN) 170.86p -0.72%
Informa (INF) 361.10p -0.72%

FTSE 250 - Risers

Diploma (DPLM) 2,172.00p 26.94%
SSP Group (SSPG) 203.00p 12.34%
Cineworld Group (CINE) 48.52p 9.90%
Biffa (BIFF) 213.00p 6.07%
William Hill (WMH) 225.90p 5.86%
Mitchells & Butlers (MAB) 136.00p 5.75%
National Express Group (NEX) 125.00p 4.95%
Synthomer (SYNT) 320.80p 4.91%
Morgan Advanced Materials (MGAM) 220.50p 4.76%
Diversified Gas & Oil (DGOC) 107.60p 4.67%

FTSE 250 - Fallers

Energean (ENOG) 571.40p -8.30%
Petrofac Ltd. (PFC) 114.50p -7.40%
Network International Holdings (NETW) 277.00p -6.10%
Hochschild Mining (HOC) 213.80p -5.65%
GCP Student Living (DIGS) 127.00p -4.94%
Shaftesbury (SHB) 472.40p -4.22%
Beazley (BEZ) 323.00p -3.64%
Rathbone Brothers (RAT) 1,658.00p -3.04%
Centamin (DI) (CEY) 201.00p -2.95%
PZ Cussons (PZC) 210.50p -2.33%