London close: Stocks finish higher after stronger data in China, upbeat earnings in US

Fri 12 Apr 2019

LONDON (SHARECAST) - (Sharecast News) - London stocks finished higher on Friday as investors mulled mixed Chinese data and stronger-than-expected earnings from US banking heavyweight JP Morgan, with the latter beating estimates "on almost every front" according to analysts at RBC Capital Markets.
The FTSE 100 was 0.26% firmer at 7,437.06, while the pound was up 0.3% against the dollar to 1.3088 and 0.17% weaker versus the euro at 1.1581.

"Equities have been relentlessly positive all day, with the session having started off on the front foot thanks to Chinese credit growth, which rose 10.7% over the year to hit a sum equivalent to 9% of the country's GDP. This is stimulus undertaken in the style of 'shock and awe', and certainly puts the ECB's miserly TLTROs into the shade," said IG's Chris Beauchamp.

"The sense that the Chinese government has stepped up to the plate and delivered a hefty dose of liquidity encouraged investors from the opening bell, with US markets taking up the positive theme this afternoon."

But other economic data out of China at the end of the week prompted a more mixed response from analysts.

Figures released overnight showed that Chinese exports surged past expectations in March, rising by 14.2% in US dollar terms from the previous year despite the ongoing trade dispute with the US, following a 20.8% drop in February.

In parallel, imports declined 7.6% compared to a 5.2% fall the month before. Analysts had been expecting exports to rise 6.5% and imports to edge up 0.2%.

"Stronger-than-anticipated exports hint at an uptick in foreign demand but disappointing imports suggest that domestic demand may not be holding up as well as hoped," said Julian Evans-Pritchard at Capital Economics.

Meanwhile, separate data showed that new loans and lending jumped higher in March, with M2 money supply up 8.6% on the year versus expectations for an 8.2% increase, and new loans coming in at 1.69 trillion yuan compared to expectations of 1.25 trillion.

"The upturn in M1 growth was to be expected but is a relief nonetheless. The green shoots of monetary loosening were there in January and February, but with Lunar New Year distortions, uncertainty was heightened. The March data confirm that an economic recovery is in the pipeline," said Freya Beamish at Pantheon Macroeconomics.

That sentiment was echoed in equity markets, with shares of miners Glencore, Antofagasta and Rio Tinto all forging ahead as copper prices advanced.

Gaming retailer Games Workshop rallied after saying that trading since January has "continued well" with sales and profits ahead of last year.

Transport company National Express was in the green as it announced the acquisition of a 60% stake in WeDriveU, an employee shuttle company in San Francisco's Silicon Valley, for $84.3m (64.5m) with an option to buy the rest over three years.

On the downside, online trading platform Plus500 saw its shares tumble as it posted a 65% drop in first-quarter revenue amid "subdued" financial markets, with the number of active customers and average revenue per user both down amid low levels of volatility. Sector peers IG Group and Playtech were caught in the downdraft but later recovered most of their losses.

Shares in Pets at Home slumped as it emerged that Canada Pension Plan Investment Board (CPPIB) has sold its entire 10.8% stake in the pet supplies retailer.

Entertainment One fell as the Peppa Pig owner said it had successfully placed 28.9m shares at 450p, raising 130m to help fund the acquisition of UK score producer Audio Network.

Tobacco stocks British American Tobacco and Imperial Brands, with traders pointing to a Wall Street Journal report that US pharmaceutical chain Rite-Aid will stop stocking e-cigarettes due to fears over their appeal to children and teens.
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