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FTSE nears 6,000 as China data injects relief
Better-than-expected trade data from world's fastest growing economy sparks hope slowdown may not be as bad as feared.
The FTSE 100 has risen towards the 6,000 mark as fresh data from China suggested the country's economic troubles may not be as bad as feared.
The UK blue-chip index rose 61 points, or 1%, to 5,990, as China's trade data showed exports fell by just 1.4% in December, far less severe than the 8% plummet that had been expected. A 7.6% drop in imports was also better than expected.
'These improvements do appear to suggest that while the economy is slowing, things may not be nearly as bad as markets had been fretting about,' said Michael Hewson, chief market analyst at CMC Markets UK.
'A better Chinese trade surplus will help offset capital outflows that have pressured the currency and led to state intervention while the better trade data will inspire hopes of global growth recovery,' added Mike van Dulken, head of research at Accendo Markets.
Miners were among the top FTSE 100 risers, cheered by the better-than-expected data from China, the world's top metals consumer. Rio Tinto (RIO) rose 3.9% to £17.16, Anglo American (AAL) was up 3.7% at 241p and Glencore (GLEN) added 2.6% to 73.8p.
Tesco (TSCO) continued to rise, up 3.5% at 160.6p, as investors hoped for a better-than-expected Christmas period for the embattled supermarket, following encouraging data from the grocery sector yesterday.
Sainsbury's (SBRY) was the biggest faller on the index, down 2% at 246.2p, despite reporting a better-than-expected performance over Christmas. The supermarket said sales fell 0.4% in the 15 weeks to 9 January, better than the 0.7% fall analysts had been expecting. Sainsbury's also upgraded its expectations for sales in the second half of its financial year.
On the FTSE 250, Tullow Oil (TLW) was the biggest riser, up 10.4% at 135.9p, as investors welcomed progress on cost cutting and debt reduction. The shares were also given a boost by the oil price, which lifted off lows of $30.42 overnight to trade at $31.62 a barrel, up 2.5% on the day.
The oil explorer said it entered 2016 with $1.9 billion (£1.3 billion) in undrawn bank facilities and was able to cut a further $200 million from its $1.1 billion capital investment budget.
'The real key to the statement looks to be a further capital investment cut and lower-than-expected debt pile, both of which serve to help reduce the short-term risk profile of the business,' said Russ Mould, investment director at AJ Bell.
Shares in Tullow's small cap rival, Premier Oil (PMO) were meanwhile suspended pending announcement of a potential acquisition classed as a reverse takeover. Reuters reported the group was set to acquire oil and gas assets from German utility company E.ON (EONGn.DE).
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- Rio Tinto PLC (RIO.L)
- Anglo American PLC (AAL.L)
- Glencore PLC (GLEN.L)
- Tesco PLC (TSCO.L)
- Sports Direct International PLC (SPD.L)
- J Sainsbury PLC (SBRY.L)
- Tullow Oil PLC (TLW.L)
- Premier Oil PLC (PMO.L)
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by Gavin Lumsden on Oct 21, 2016 at 17:18