The FTSE 100 was higher on Thursday as investor sentiment picked up amid a number of positive trading updates from London’s leading companies.
Optimism around China also helped support the index after the world’s second-largest economy moved to support the property sector earlier this week and provided additional support for banks.
“The FTSE 100 has opened 0.65% higher this morning as investors digest a string of trading updates and try to assess the global economic outlook in light of China’s major stimulus package,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
After months without any intervention by the Chinese authorities, equity bulls have enjoyed a broad easing of the Chinese economy through the reduction of its Repo rate and sector-specific action targeted at the housing market and banking system.
“Fresh from big stimulus measures earlier in the week, all eyes remained focused on China amid talk that Beijing might inject up to 1 trillion yuan of capital into its top banks and to support the economy through interest rate cuts,” said Russ Mould, investment director at AJ Bell.
“The SSE Composite index is now up 9.5% since the start of the week, delivering a repeat of the stellar rally we saw in early February. It’s been a while since China was the talk of the town among investors, but it has certainly turned heads this week.
“Naturally, London-listed miners have revelled in China’s rich menu of initiatives to drive economic growth with their shares rising higher on the expectation of greater metals demand.”
We published an article this week highlighting Antofagasta as a share to position for improving sentiment around China. The additional stimulus hopes overnight from China has played into our suggestion and ANTO was over 5% higher at the time of writing. The rest of the mining sector was also higher with Anglo American and Glencore gaining more than 4%.
Prudential was the top riser, gaining 6% due to its exposure to the Chinese financial system.
Aside from the mining sector and other China-focused sectors, Halma was having a good session after announcing an upbeat trading statement.
“Safety conglomerate Halma spoke of varied conditions across its many end markets in a trading update this morning but still expects strong cash generation and improving margins,” Matt Britzman said.
“The strong run-up in Sterling is set to continue acting as a headwind, but stripping currency impacts out, top-line growth is expected in line with comments earlier in the year. The acquisition pipeline looks to be healthy too, which is key for Halma given how well-placed it is to capitalise on fragmented end markets.”
“One eye will also be on tomorrow’s US PCE numbers, the Fed’s preferred measure of inflation, which will be key for gauging the interest rate path across the pond which has global impacts.”