View the article online at http://citywire.co.uk/money/article/a759712
Pound and FTSE surge on manufacturing boom
Pound hits near-six year high while FTSE 100 enjoys healthy gains as data shows rapid expansion in UK manufacturing.
The pound has hit its highest level in nearly six years and the FTSE 100 has jumped after fresh data showed UK manufacturing expanding at its fastest rate in seven months.
Sterling hit $1.7142 against the dollar, its highest level since October 2008, after the purchasing managers’ index for UK manufacturing came in at 57.5 in June, a surprise jump from 57 in May. Any reading above 50 indicates expansion. The FTSE 100 meanwhile added 56 points, or 0.8%, to 6,799 as a rally from the index gathered strength throughout the day. Bullishness from US investors, who pushed the S&P 500 to a new all-time high, added to the optimism.
The Bank of England is thought to be edging towards a 2015 interest rate rise only if UK growth starts to cool in the second half of the year. Today’s UK manufacturing figures are likely to add more weight to arguments for a hike this year.
‘With governor Mark Carney stressing that the strength of data will drive when the Bank of England will first edge up interest rates, the robust June manufacturing PMI will likely be seen as supportive to a move in late 2014 rather than early 2015,’ said Howard Archer, chief economist at IHS Global Insight.
The pound’s rise has also been helped by weakness in the dollar, which has contributed towards a rise in the gold price to a three-month high of $1,332.10 an ounce, later retreating to $1,327.80.
Worsening violence in Iraq and escalating tensions between Russia and the Ukraine have also spurred flight to the precious metal.Iraqi troops are attempting to dislodge an al Qaeda splinter group in Tikrit, while Ukrainian president Petro Poroshenko has declared government forces will renew offensive operations against pro-Russian rebels after a ceasefire expired.
Positive data from China was another contributor to the FTSE 100's rise. Miners were among the biggest gainers after new data from top metals consumer China showed factory activity hit multi-month highs in June. Among the top risers were:
- Rio Tinto (RIO) up 96p, or 3.1%, at £32.04
- Randgold Resources (RRS) up 115p, or 2.4%, at £49.88
- BHP Billiton (BLT) up 53.5p, or 2.8% at £19.42
- Anglo American (AAL) up 59.5p, or 4.1%, at £14.90
- Fresnillo (FRES) up 24.5p, or 2.8%, at 896.5p
Tesco (TSCO) mounted a small recovery after early falls following data from market researcher Kantar Worldpanel showing sales fell 1.9% in the 12 months to 22 June, ending 0.2% down at 284.5p. Morrisons (MRW) suffered more heavily, dropping 2% to 179.7p after its sales fell 3.8% over the period. Sales at Sainsbury’s (SBRY) rose 3%, but the shares shed 0.7% to 313.2p.
Outside the FTSE 100, Ocado (OCDO) was a big faller, as its first half figures showed a marked reduction in sales growth in the second quarter. Shares in the online shopping group fell 4.4% to 355.1p.
News sponsored by:
Here at BlackRock, we help investors make more out of commodities with a range of innovative, flexible and resilient investment strategies.
From Brazil and Mexico, to Vietnam and Nigeria, the rapidly developing economies of Latin American and frontier markets, which are some of the smaller, less developed economies in the world, provides investors with a wealth of potential opportunities. Discover why BlackRock's investment trust range is well placed to help you make more of these exciting regions.
In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.
More about this:
Look up the shares
- Rio Tinto PLC
- Randgold Resources Ltd
- BHP Billiton PLC
- Anglo American PLC
- Fresnillo PLC
- Tesco PLC
- Ocado Group PLC
- J Sainsbury PLC
- WM Morrison Supermarkets PLC
Tools from Citywire Money
From the Forums
Weekly email from The Lolly
Get simple, easy ways to make more from your money. Just enter your email address below
An error occured while subscribing your email. Please try again later.
Thank you for registering for your weekly newsletter from The Lolly.
Keep an eye out for us in your inbox, and please add email@example.com to your safe senders list so we don't get junked.
by Gavin Lumsden on Oct 23, 2016 at 00:01