Source: Sharecast
The FTSE 100 was up 0.8% at 7,605.46, with miners and financials pacing the advance.
Sentiment was boosted after the Chinese central bank said it will cut the required reserve ratio for commercial lenders by 50 basis points from 6 January to help bolster the slowing economy. According to the People’s Bank of China, the move will release around 800 billion yuan (£87bn) of liquidity into the financial system. As it stands, the required reserve ratio is 13% for big banks and 11% for smaller ones.
The latest cut by the PBOC means it has reduced the reserve requirement for banks eight times since early 2018.
Investors were also mulling the release of the latest manufacturing figures out of China. According to a private survey released earlier, activity in the manufacturing eased a touch in December. The Markit/Caixin purchasing managers’ index printed at 51.5 for December 2019, down from 51.8 in November and below expectations for a reading of 51.7. Still, it remained above the 50 mark that separates contraction from expansion.
The sub-index for new orders fell the second month in a row, while the index for export orders ticked lower by remained above 50. The sub-index for output also nudged down for the second month in a row.
Pantheon Macroeconomics said the Caixin manufacturing PMI was due a correction
"The index was well above its uptrend, so a decline is not surprising," said senior Asia economist Miguel Chanco. "Without the phase one trade deal it would have been worse. With the index in correction mode, we are reticent to read too much into the details, but the loss of momentum in new orders is disappointing, chiming with the official report."
On home turf, the Markit/CIPS manufacturing purchasing managers’ index declined to 47.5 in December from 48.9 in November, coming in just a touch above the flash estimate of 47.4 but below consensus expectations for a reading of 47.8. It remained below the 50.0 level that separates contraction from expansion for the eighth consecutive month and marked the fastest pace of decline since July 2012.
The drop was put down to falling intakes of new work from both domestic and overseas clients, while efforts to reduce Brexit safety stocks also stymied output volumes.
Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: "As the downturn deepened, Brexit uncertainty continued to dominate the business landscape and impact on client confidence. Combined with the effects of a slowing global economy, new orders from domestic and export markets dried up at one of the fastest rates seen in seven-and-a-half years.
"This impact trickled down to job creation strategies, as the pace of job losses intensified and companies were reluctant to commit to additional expense. Businesses continued to be squeezed as input prices rose as a result of shortages and transportation costs."
Brock said that while the result of the General Election will bring some clarity to businesses, it still feels "like a long road ahead" for manufacturing to recover its losses from this year.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said year-end struggles should give way to stabilisation in the first quarter.
"Following the Conservatives' landslide win and the resulting elimination of near-term no-deal Brexit risk, we expect manufacturing output to stabilise in Q1, despite the ongoing global downturn, thanks to the reduction in uncertainty.
“Overall, we look for quarter-on-quarter GDP growth to pick up to 0.4% in Q1, from 0.1% in Q4, as firms start to undertake some of the expenditure that they have put off due to the risk of a radical Labour government and a no-deal Brexit at the end of January."
More broadly, the mood continued to be underpinned by optimism over a Sino-US trade deal after US President Donald Trump said earlier in the week that phase one of a deal with China would be signed on 15 January at the White House. Trump also said he was planning on travelling to Beijing at a later date to start discussions on a second trade deal with China.
Corporate news was scarce. Building materials group CRH rise after it appointed Richie Boucher to the role of chairman.
Shares of Tullow Oil slumped after it said its Carapa-1 exploration well offshore Guyana had discovered oil, but this was lower than pre-drilling estimates.
Market Movers
FTSE 100 (UKX) 7,605.46 0.84%
FTSE 250 (MCX) 22,051.53 0.77%
techMARK (TASX) 4,200.53 0.81%
FTSE 100 - Risers
Glencore (GLEN) 243.00p 3.25%
Smiths Group (SMIN) 1,735.00p 2.85%
Barclays (BARC) 184.74p 2.84%
Pearson (PSON) 655.00p 2.83%
Antofagasta (ANTO) 941.80p 2.73%
TUI AG Reg Shs (DI) (TUI) 978.20p 2.56%
Hargreaves Lansdown (HL.) 1,984.00p 2.53%
Legal & General Group (LGEN) 310.40p 2.44%
BP (BP.) 482.15p 2.24%
Standard Life Aberdeen (SLA) 334.20p 1.86%
FTSE 100 - Fallers
British Land Company (BLND) 634.40p -0.69%
Sage Group (SGE) 746.40p -0.35%
Relx plc (REL) 1,899.00p -0.34%
Meggitt (MGGT) 654.60p -0.33%
Polymetal International (POLY) 1,192.00p -0.25%
JD Sports Fashion (JD.) 835.40p -0.24%
Experian (EXPN) 2,546.00p -0.24%
Associated British Foods (ABF) 2,592.00p -0.23%
Ocado Group (OCDO) 1,276.50p -0.20%
Auto Trader Group (AUTO) 593.80p -0.13%
FTSE 250 - Risers
Watches of Switzerland Group (WOSG) 394.40p 4.89%
Senior (SNR) 180.10p 4.16%
Grafton Group Units (GFTU) 903.00p 4.15%
IP Group (IPO) 73.80p 3.94%
Sirius Minerals (SXX) 3.66p 3.86%
Kainos Group (KNOS) 768.00p 3.50%
Renishaw (RSW) 3,886.00p 3.13%
Aston Martin Lagonda Global Holdings (AML) 535.60p 3.04%
Sanne Group (SNN) 697.00p 2.95%
Avast (AVST) 466.00p 2.92%
FTSE 250 - Fallers
Tullow Oil (TLW) 59.94p -6.34%
Hochschild Mining (HOC) 175.20p -4.26%
Helios Towers (HTWS) 152.20p -3.67%
TI Fluid Systems (TIFS) 258.00p -3.01%
Centamin (DI) (CEY) 123.95p -2.40%
Fresnillo (FRES) 629.20p -1.72%
Dixons Carphone (DC.) 142.25p -1.35%
Ascential (ASCL) 387.00p -1.23%
Spirent Communications (SPT) 248.50p -1.19%
Airtel Africa (AAF) 79.05p -1.13%