(Sharecast News) – Miners and banks paced gains on Wednesday helped by better-than-expected out in China and the UK.
Overnight, China’s National Bureau of Statistics released retail sales and industrial production figures for October that beat economists forecasts.
Nonetheless, Duncan Wrigley at Pantheon Macroeconomics noted that both retail sales were only slightly higher month-on-month and argued that Chinese authorities would only pursue enough government spending to buttress growth as the economy was restructured.
“The Central Economic Work Conference in December is likely to continue the strategy of using fiscal policy to anchor economic growth, supporting private sector incomes and allowing sentiment to repair,” Wrigley said.
“We see little chance of a mega stimulus; policymakers are keen to restructure the economy towards manufacturing, especially high-tech manufacturing, and away from the property sector, and recognise this means a longer, “tortuous” recovery.”
In the case of Anglo American there were also favourable comments from J.P.Morgan to factor in.
The bank’s analysts said that Glencore’s acquisition of Teck Resources’s coal operations underscored Anglo’s discount versus peers and the opportunity to crystallise value.
For their part, analysts at RBC noted the importance of the meetings between the Chinese and US presidents at the APEC summit due to the mining sector’s ties to China.
Lenders’ shares meanwhile benefitted from news of a sharp drop in UK consumer prices last month which Chris Beauchamp at IG said took some of the pressure off the Bank to England to continue raising rates.
“While bank stocks will have to get used to a world without a steady rise in interest income, the prospect of easing pressures on the UK economy continues to support bank stocks, which made further headway this afternoon.”
According to the Office for National Statistics, the rate of increase in the Consumer Price Index slowed from 6.7% in September to 4.6% in October.
“But with food, core goods and energy prices set to rise only slowly next year, the headline rate should still be below 3% for most of next year, even if services CPI inflation is somewhat sticky,” Pantheon’s Samuel Tombs added.
“Accordingly, we continue to think that sufficient progress back towards the 2% target will have been made by the MPC’s May meeting for it to reduce Bank Rate to 5.00%, and eventually to 4.50% by the end of next year.”
But it was industrial support services and Electricity that topped the FTSE leaderboard on the back of the latest results out from Experian and SSE, respectively.
Top performing sectors so far today
Industrial Support Services 9,827.97 +2.73%
Electricity 10,383.86 +2.43%
Industrial Metals & Mining 6,660.32 +2.02%
Automobiles & Parts 1,560.28 +1.99%
Banks 3,505.21 +1.79%
Bottom performing sectors so far today
Beverages 22,272.01 -1.56%
Personal Care, Drug and Grocery Stores 3,999.31 -0.61%
Real Estate Investment Trusts 2,230.78 -0.55%
Pharmaceuticals & Biotechnology 19,501.24 -0.36%
Gas, Water & Multiutilities 5,958.26 -0.33%
