China stimulus plan lifts FTSE 100; G4S boosts mid-caps

06 Sep, 2019

The main index edged 0.2pc higher, tracking global stock markets that welcomed China's move to slash the amount of cash that banks must hold as reserves, which will provide more liquidity to support its economy.

The mid-caps advanced 0.3pc, helped by a 6.5pc jump in G4S, the world's largest private security firm, after Sky News reported US security company Brinks was mulling a takeover of G4S' cash solutions unit.

China's stimulus plan helped boost blue-chip mining stocks such as Glencore and BHP. Packaging firm Smurfit Kappa rose 3.4pc to the top of the FTSE 100 as its latest bond offering incited demand from yield-starved investors.

"(Smurfit's) bond offering, at relatively advantageous rates as fixed-income yields trend lower, will provide it with much cheaper financing," Cityindex analyst Ken Odeluga said.

Homebuilder Berkeley rose 2.8pc after pointing to robust market conditions in London and southeast England.

The much-anticipated and traditionally influential US non-farm payrolls numbers showed slower-than-expected growth in August, pointing to an economy slowing against the backdrop of President Donald Trump's trade war with China.

"The employment report pretty much cements only a 25-basis-point rate cut for the US Federal Reserve at the Sept. 18 meeting," said Edward Moya, senior market analyst at Oanda.

The main index's gains were kept in check by oil heavyweights BP and Shell, which tracked a fall in crude prices, and utilities that slipped on the prospect of renationalisation if a Labour government took power in Britain.

Shares of SSE, Centrica and Severn Trent shed roughly 2pc.

A snap election remains a possibility as lawmakers prepare for a showdown over delaying Brexit.

"While no-deal Brexit risks have been abated, the nationalisation risks remain firmly in place," Moya said.

United Utilities lost 2.9pc as a rating and price target downgrade from RBC also weighed on the stock.

 

Read Comments