UK equities were back in favour on Wednesday with just one quarter of FTSE 100 components suffering losses after a surge in China’s factory output reignited demand for raw materials producers and a further weakening of the greenback attracted investors to the alternative of gold.
The FTSE 100 index ticked up 36.2 points or 0.7% to 5,266.8, while the FTSE 250 index gained 105.6 points or 1.2% to 9,226.6.
Production in China jumped at an annual rate of 16.1% in October, its highest increase in 19 months, while the nation’s trade surplus expanded to to $24 billion—almost double its September reading as the pace of decline in exports decelerated.
Gold futures climbed more than 1% higher in New York to hit yet another record high—this time reaching just over $1,116 per ounce as the US dollar extended its recent slide.
There was upbeat data on home soil as well, where the number of UK-domiciled workers claiming jobless benefits increased by just 12,900, which was considerably less that than approximate 20,000 forecast and the smallest increase in 18 months.
Meanwhile, the Bank of England’s inflation report revealed inflation is expected to remain below its 2% target for the majority of the next three years, while Governor Mervyn King said in a press conference earlier today that the Monetary Policy Committee has “a completely open mind” regarding additional asset purchases. Together, the comments supported the widespread belief that interest rates will remain at current historic lows well into 2010 and potentially beyond.
Among equity movements, the price of yellow metal fuelled gold miner Randgold Resources to a record high with a climb of 6.1% that pushed it to the top of the FTSE 100 leaderboard on Wednesday. Mexican silver miner Fresnillo followed in Randgold’s footsteps with a 5.9% rise, while fellow metal extractors Kazakhmys, Xstrata and Vedanta Resources gained 2.7%-3.0% as metal prices increased across the board.
Insurers were also in fine fettle as their exposure to equity movements offered support. Legal & General added 5.5%, tracked by Aviva, up 3.0%, and Standard Life, 2.6% firmer.
It was a similar story for fund managers, for obvious reasons, with Man Group taking on 3.9% and Schroders up 3.7%, while interdealer broker ICAP ticked up 2.4%.
On the earnings front, supermarkets group Sainsbury took on 3.2% after beating market expectations to post first-half adjusted pretax profits of £307 million on the back of strong sales growth and cost efficiencies.
Not all blue-chips enjoyed a buoyant session, however. International publisher Reed Elsevier led the casualties with a 4.0% slide following the resignation of chief executive Ian Smith after just eight months at the helm. The Anglo-Dutch firm will now be led by Erik Engstrom with immediate effect. In a separate announcement, Reed said second-half business trends are expected to continue into 2010 and difficulties remain in its advertising and promotion markets.
