UK markets jumped this afternoon after data was released showing the US manufacturing sector expanded at its fastest rate in nearly a year. Both the benchmark FTSE 100 index tracking large-cap companies and the FTSE 250 index tracking mid-cap companies rallied sharply moments after the data became public. The FTSE 100 is now closed at 5,812, after rising by 74 points, or 1.3%. The FTSE 250 added 86 points, or nearly 0.8%, to close at 11,504.
Investors were immediately bidding equities higher after the Institute for Supply Management (ISM) released its April survey showing industrial sector activity in America rose to 54.8 from 53.4 in March. This went against expectations for a drop in the key manufacturing gauge. The data gave investors confidence that the US economy is performing reasonably well, even though other economic indicators have recently been soft.
“The FTSE 100 had been mostly treading water on gains of 0.4% for much of the session until the release of ISM manufacturing data that really breathed some life into what had been a fairly uneventful session. As soon as the US ISM data was released, the FTSE 100 immediately rallied,” explained Joshua Raymond, chief market strategist at City Index
The US manufacturing data stands in direct contrast to disappointing UK manufacturing figures that were released earlier on Tuesday. The gauge of UK factory output showed manufacturing growth was relatively anemic in the past month.
In terms of stock winners and losers, the main winner by a wide margin on the FTSE 100 was Lloyds Banking Group (LLOY). Shares in the company rallied by over 8% after the bank released a first-quarter interim management statement that exceeded investors’ expectations. Meanwhile, Man Group (EMG) was the biggest loser on the FTSE 100. The company reported first quarter results showing that the hedge-fund manager was struggling to keep investors from leaving its investment funds. Total net outflows from its funds reached £1 billion.
Shares in BP (BP.) also took a hit after reporting first-quarter results that fell below market expectations. However, Morningstar analyst Stephen Simko believes the numbers shouldn’t cause investors to panic.
“Although BP's first-quarter results were somewhat weak, our first take is that this is simply short-term noise and does not reflect the company's long-term recovery story,” said Simko in his latest BP research report. "To us, the road to recovery for BP is still on track, although it's a road filled with uncertainty (relating to the ultimate cost of fines and lawsuits) and no or negative growth (due to asset sales).”
Quarterly results and the release of interim management statements were some of the main catalysts behind large stock price movements on Tuesday. Looking ahead to Wednesday, two other major companies will be releasing quarterly information which could cause markets to move: BSkyB (BSY) and Standard Chartered (STAN). To learn about other companies reporting later this week, read Preview: Equity Market Movers for the Week.
