FTSE 100 watch: Investors weigh mixed economic data

on Oct 24, 2016

London’s benchmark index had pared early gains by midday as investors weighed a sharp drop in monthly UK industrial orders against better-than-expected Eurozone services and manufacturing data. As of 14:01 BST, the FTSE 100 had eased 0.03 percent to stand at 7,018.06 points.

The Confederation of British Industry’s monthly industrial orders balance fell to -17 in October from -5 in September, well below the consensus of -5. However, CBI said manufacturing output and orders grew in the last quarter.
Meanwhile, IHS Markit’s flash Eurozone composite purchasing mangers’ index rose to 53.7 in October from 52.6 in September, ahead of forecasts of 52.8 and above the 50 level that separates an expansion from a contraction. The manufacturing PMI improved to 53.5 in October from 52.6 a month earlier, beating expectations of 52.7. The services PMI jumped to 53.5 from 52.5, compared to an estimated 52.4.

IG analyst Joshua Mahony commented: ”Particularly impressive data came from the manufacturing sector which seems to have staged an unlikely comeback, with eurozone, French and German manufacturing PMIs all hitting 2016 highs. Coming at a time when the euro is tumbling back to a seven-month low, it is clear that producers are enjoying somewhat of a renaissance following a period of uncertainty.”
Japan’s manufacturing PMI also rose to 51.7 in October from 50.4 in September. Investors will now eye the US manufacturing PMI, due at 14:45 BST.

On the corporate front, mining shares have been lifted by a bullish note on the sector from Barclays. Antofagasta (LON:ANTO) has added more than two percent, while BHP Billiton (LON:BLT) and Rio Tinto (LON:RIO) have risen just over one percent.
Elsewhere, easyJet (LON:EZJ) has climbed almost three percent after an upgrade from UBS, which gave the budget carrier a ‘buy’ rating. The bank said the shares this year “have materially de-rated and we think [they] look attractive.” The main concerns heading into 2017 are “around factors the company cannot control namely currency and oil movements as well as industry capacity,” said UBS analyst Jarrod Castle in a research note. But easyJet “has both cost and capex levers it can pull”.
Pharmaceutical firms were among the biggest losers on the FTSE 100 index, with Shire (LON:SHP), Hikma Pharmaceuticals (LON:HIK) and AstraZeneca (LON:AZN) all shedding around two percent. Royal Bank of Scotland (LON:RBS) was also down around one percent as Investec cut the bank’s rating to ‘sell’ from ‘hold’.

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