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SABMiller Leads London Market Forward

THURSDAY MARKET UPDATE: SABMiller's first-half results impressed investors and shares rallied by 6.5%

Alanna Petroff 22 November, 2012 | 6:14PM

UK and European markets got off to a solid start on Thursday after better-than-expected manufacturing data from China helped boost the mood amongst traders and investors. Strong half-year results and a dividend boost from SABMiller (SAB) also helped pull the UK markets higher throughout the trading day.

At the close, the FTSE 100 index had surged ahead by 39 points, or 0.7%, to close at 5,791. The FTSE 250 index also popped up by 78 points, or 0.7%, to close at 11,862.

Encouraging Data from China
The China HSBC Flash Manufacturing Purchasing Managers Index (PMI) hit a 13-month high in November, indicating that the private manufacturing sector in China is now expanding, though at a very slow pace.

“As November’s flash reading of HSBC manufacturing PMI bounced back to the expansionary territory for the first time in 13 months, this confirms that the economic recovery continues to gain momentum towards the year
end. However, it is still the early stage of recovery and global economic growth remains fragile," said Hongbin Qu, a chief HSBC economist in China.

SABMiller's Sweet Surprise

Shares in SABMiller surged ahead by 6.5% and topped the FTSE 100 leaderboard on Thursday after the multi-national brewer reported higher revenue and double-digit profit growth in the first-half of the fiscal year. 

The latest interim results from the brewer also indicated there was reason to be optimistic about future prospects for the company. A paragraph in the interim results stated: "We have recently seen moderation of economic growth in some countries, but the potential of the principal emerging markets in which we operate remains strong." 

Ceasefire in Israel
A ceasefire between Israel and Hamas also helped calm investors.

"News that a ceasefire had been negotiated in Cairo between Israel and Hamas, hopefully seeing an end to the conflict cantering on the disputed Gaza, has also reduced some of the risk associated with the Middle East. Note however that the situation remains tense and complex, with claims from Tel Aviv that there have been continued rocket attacks and Hamas saying the ceasefire is only valid if all Gaza crossings are opened," said Mike van Dulken, head of research at Accendo Markets.

US Thanksgiving Means Low-Volume Trading

Meanwhile, today's market gains were made on low-volume trading, as many investors around the world decided to stay home during the US Thanksgiving holiday.

"Things are all quiet on the US front as they shut up shop for Thanksgiving today and so we can expect the last two sessions of this week to suffer from woefully low volumes," said Angus Campbell, head of market analysis at Capital Spreads. "On the whole this week volumes have not impressed and so for many they are calling the recent strength into question."

 

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article
Security NamePriceChange (%)Morningstar
Rating
SABMiller PLC3,525.00 GBX1.08
About Author Alanna Petroff

Alanna Petroff  is a financial journalist with Morningstar UK.