China policy shift “could be a game changer”
09:08 , Graeme Evans
The best week for China stock markets since 2008 comes after leaders vowed “necessary fiscal spending” to meet the country’s economic growth target.
China’s central bank also unveiled stronger-than-expected monetary stimulus, including cuts to interest rates.
UBS Global Wealth Management said this morning: “We think this policy shift could be a game changer for Chinese risk assets but is contingent on both execution and continuation.
“Our view is the broad market can rally by another high single-digit percentage, following the near 14% move since the announcement of the stimulus package.
“Whether it can rally further than our target will depend on whether the government can execute their plan efficiently and announce more fiscal measures to support growth.”
Prudential leads FTSE 100 as BP steadies, Cranswick up 4%
08:45 , Graeme Evans
Prudential shares lead the FTSE 100 index and Burberry is among the best FTSE 250 stocks as they continue to benefit from the Asia stock market rebound.
The Pru’s China focus has helped to lift its shares by 26.8p to 708p and by 13% this week, while the potential boost for demand sent the luxury goods group up by another 3% or 21.4p to 685.2p and by 16% since Monday.
Other beneficiaries in the FTSE 350 included Aston Martin Lagonda, which improved 3% or 4.4p to 155.8p.
In the FTSE 100 index, BP shares put back 3p to 386.85p after this week’s oil price led losses and Shell edged 6.5p higher to 2421.5p.
Many of the leading blue-chip fallers came from the financial sector as NatWest dropped 2.7p to 343.6p and Aviva declined 2.7p to 487.1p.
In the FTSE 250, Cranswick rose 4% or 170p to a fresh record of 4885p after the food producer raised its full-year guidance to the upper end of City forecasts.
China stocks in best week since 2008, FTSE 100 slightly higher
08:27 , Graeme Evans
The Shanghai Composite has posted its best week since 2008, boosted by a series of moves aimed at keeping the country on track for its 5% GDP target.
The benchmark rose 2.9% on Friday and by 13% over the week, taking it back to where it was at the end of May.
The rally ahead of next week’s holiday for China markets follows cuts to key lending rates and 0.5% reduction in the amount of cash banks must hold in reserve.
The Hang Seng index also rose 3% to stand more than 12% higher in its best week since 2011, while Tokyo’s Nikkei 225 index today closed 2.3% higher.
Richard Hunter, head of markets at Interactive Investor, said: “There will of course be a time lag between the announcement of the stimulus package and its effects washing through to the economy, but the very fact that the authorities have moved away from their previous inertia has energised both domestic and international markets alike.”
The mood in the UK is more subdued, with the FTSE 100 index up 9.17 points to 8294.08 in early dealings.
Cranswick boosts guidance after strong first half
07:56 , Graeme Evans
Food producer Cranswick said trading this summer has been better than hoped, leaving it on track for a full-year performance at the upper end of City forecasts.
The supplier of pork and poultry products reported growth in its core UK food business and a positive contribution from its recently expanded pig farming operations.
The volume growth in the first half means its performance for the year to 29 March is expected to be at the upper end of City forecasts between £179.2 million and £191.7 million.This compares with £176.6 million in 2023/24.
The FTSE 250-listed business employs over 15,000 people and has 23 production facilities in the UK.
It was formed in the early 1970s by farmers in East Yorkshire to produce animal feed and has since evolved into a business which produces fresh pork, poultry, convenience, gourmet products and pet food.
Bidders circle UK firms as M&A surges
07:36 , Graeme Evans
The UK is this year’s third most targeted country for merger and acquisition (M&A) activity, LSEG Deals Intelligence said today.
M&A where a UK company is the bid target totalled $137.1 billion (£102.4 billion), 54% more than the value recorded in the first nine months of 2023.
Foreign buyers accounted for 72% of these deals, the highest share in three years after a 79% surge in inbound activity.
Deals involving UK targets accounted for 6% of the global M&A total, up from 4% last year and only behind the United States and China.
Multi-billion bid targets have included paper and packaging firm DS Smith, the property portal Rightmove and the cyber security company Darktrace.
Lucille Jones, senior manager at LSEG Deals Intelligence said the removal of UK political uncertainty appears to have brought clarity and confidence to boardrooms.
She said: “This, coupled with the expectation of a further rate cut before the end of the year, bodes well for dealmaker appetites, and may encourage more companies off the sidelines to pursue acquisitions.”
The value of UK outbound M&A increased 15% from the third quarter of 2023 to $52.1 billion (£38.9 billion) so far during 2024.
Goldman Sachs leads the financial advisor ranking for deals with any UK involvement announced during the first nine months of 2024.
Asia stocks retain momentum, Brent Crude at $71.39
07:06 , Graeme Evans
Demand for Asia-listed stocks continues to improve after China this week unveiled a series of measures to support the country’s economy.
The Hang Seng index added another 2.4% and is up 12% since Monday, while the Shanghai Composite this morning rose 2.5% and the Nikkei 225 by 1.6%.
On Wall Street, the S&P 500 set a record high after rising 0.4% on the back of improving sentiment caused by recent moves by central banks in the US and China. The Nasdaq and Dow Jones both finished 0.6% higher.
Weaker oil stocks meant the FTSE 100 index underperformed yesterday, with the top flight seen 10 points higher at 8295 this morning.
Brent Crude stands at $71.39 a barrel after this week’s big fall, whereas the improved China outlook means copper futures are up 7% since Monday.