Chinese stock market injection just the medicine for FTSE

4 February 2020, 18:04

China Outbreak
China Outbreak Leaving Wuhan. Picture: PA

The index soared as authorities cracked down on short selling and pumped billions into markets.

European indexes have soared in line with their Asian counterparts after Chinese authorities pumped 71.5 billion dollars (£54.9 billion) into the stock market.

Officials injected the cash to shore up markets amid the coronavirus outbreak and cracked down on short-sellers, leading to several days of slumps turning into big gains.

The growth spread to Europe on Tuesday, with the FTSE 100 enjoying its share of the spoils thanks to its heavy influence of oil and mining majors. It ended the day up 113.51 points, or 1.6%, at 7,439.82.

Connor Campbell, financial analyst at Spreadex, said: “Sentiment was helped by the World Health Organisation stating that ‘currently we are not in a pandemic’.

“Add on to that another injection of 71.5 billion dollars into the banking system by the People’s Bank of China, and the country’s continued attempts to halt the transmission of the coronavirus, and the Western indices were free to go on rebounding.”

In Europe the Cac 40 in Paris and the Dax 30 in Frankfurt both closed 1.8% higher.

Even the price of oil enjoyed a solid performance – having slipped into a bear market on Monday – trading up 0.83% as stock markets closed, with a barrel of Brent Crude costing 54.90 dollars.

The pound had a good day as the latest HIS Markit/CIPS PMI indicators showed a marked improvement in the UK construction sector since the general election – although the industry remains in decline.

As a result, the pound was up 0.25% against the dollar at 1.303, and up 0.39% against the euro at 1.1798.

In company news, the FTSE 100’s boost was also helped by big gains for plumbing and heating giant Ferguson.

Shares closed up 478p, or 6.9%, at 7,378p after the company announced it had started a new 500 million-dollar share buyback scheme and said it was eyeing a switch to a US listing once a planned demerger of its UK business is complete.

Outgoing BP boss Bob Dudley was also feeling generous, as he increased the oil giant’s dividend by 2.4%, as the company revealed a better-than-expected set of results. Shares closed up 18.85p, or 4.2%, at 471.55p.

The departure of the chairman of the UK’s largest tech firm, Micro Focus, was less welcome to shareholders as shares plunged 219.7p, or 22.3%, to 766.8p.

The fall followed Kevin Loosemore saying he was leaving, but not before unveiling an operating profit drop of more than 41% to £170 million, with revenues down 30% to £2.6 billion.

Mining giant Glencore revealed a mixed performance for production in 2019, with zinc, cobalt and coal up, but copper, gold, silver and nickel down.

Copper production was particularly slow at sites in the Democratic Republic of the Congo, although its Katanga mine increased cobalt by 10%, the company said. Shares closed up 11.5p at 233.1p.

The biggest risers on the FTSE 100 were Evraz up 25.4p at 381.7p, Ferguson up 478p at 7,378p, Glencore up 11.5p at 233.1p, BP up 18.85p at 471.55p, and Ashtead Group up 103p at 2,590p.

The biggest fallers were NMC Health down 34.5p at 1,001.5p, Polymetal down 34.5p at 1,222.5p, Centrica down 1.74p at 83.94p, Severn Trent down 29p at 2,565p, and Meggitt down 7p at 674.4p.

By Press Association

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