The FTSE 100 has built on yesterday’s gains this morning with the benchmark rising by some 35 points to move back above the 7400 handle. The pound is fairly mixed against the bulk of G10 currencies although there is a strong move seen against the New Zealand dollar, with the Kiwi being fairly heavily offered across the board.
Miners heading the risers
The best performing blue-chips in London this morning come from the mining sector with Anglo American (LON:AAL), Glencore (LON:GLEN) and Rio Tinto (LON:RIO) all rising strongly. This impressive performance is likely due to the better than expected Chinese manufacturing data released overnight, with the PMI reading for August increasing to its second highest level of the year. The last 11 months of this data point have now been in excess of 51, signalling a fair pace of expansion even if the low variance in the readings could hint at a concerted effort to smooth the numbers. There’s more manufacturing data from the Far East due out during tonight’s Asian session with the Caixin equivalent scheduled to be announced. This could well be the more important of the two, not only because in coming second it will either confirm or contradict today’s number, but also because recent Caixin releases have been less suspiciously consistent.
Provvy and Royal Mail (LON:RMG) relegated from the FTSE 100
Shares in Provident Financial (LON:PFG) have dropped by a little over 2% this morning as the firm has been ejected from the FTSE 100 in the latest quarterly rebalancing. The lender of door-to-door loans and credit cards saw its share price plummet last week when it announced there would be no interim dividend and issued a second profit warning in just three months. The stock fell down to levels not seen in almost two decades in the pandemonium but there has since been a bounce off these lows and the stock currently changes hands at more than double the 426 low seen last Tuesday. The scale of the sell-off was clearly panic-driven so it is not too much of a surprise that we’ve seen a recovery of sorts, however there is still a good chance the recent rise is nothing more than a dead cat bounce and a move back down to around the 500 level would not come as a shock to many who follow the stock.
Royal Mail (LON:RMG) has also dropped out of the leading benchmark and been demoted to the mid-caps, with the IPO in 2013, which saw a near 50% increase in just five days, having failed to deliver on its early hype. The move to second class for the postal service company has been less dramatic than the fall of Provident Financial, with a 15% decline year-to-date and whilst there is clearly headwinds to the business model, Royal Mail is on a firmer footing going forward. NMC Health (LON:NMC) and Berkeley Group (LON:BKGH) - the homebuilder that crashed out of the FTSE 100 in the post-Brexit referendum carnage last summer - have both been promoted back to the big league on transfer deadline day.