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London open: Stocks rise ahead of UK services PMI
London stocks rose on Thursday after a mixed session in Asia as investor weighed a report on China services activity and awaited UK data.
Stocks in Asia were lower outside of Shanghai as a report showed a slowdown in China services growth. The Caixin services purchasing managers’ index came in at 51.8 for April, down from 52.2 in March. A reading above 50 indicates expansion, while one below that level suggests a contraction.
It follows disappointing manufacturing PMIs on Tuesday, fuelling worries about the health of the world’s second largest economy.
The UK will also see services data from Markit at 0930 BST which is expected to reveal a slowdown in activity growth in April.
“Given how important the services sector is to the UK economy we really need to see a decent number here or run the risk that we see a growth downgrade next week from the latest Bank of England inflation report,” said Michael Hewson, chief market analyst at CMC Markets.
Thursday’s economic calendar will also see the release of US initial jobless claims at 1530 BST.
Meanwhile, oil prices advanced as a wildfire near Canada’s oil-sands district threatened production. Fighting in Libya also helped to lift prices. West Texas Intermediate was up 3% to $45.07 a barrel and Brent crude was 2.4% firmer at $45.70.
In company news, BT Group rallied after reporting a 9% rise in full year adjusted profits before tax to £3.5bn and a 6% gain in revenue to £18.9bn, boosted by two months’ contribution from newly acquired EE.
RSA Insurance jumped after saying first quarter underwriting results were “good” with operating profits up strongly as a consequence.
Morrisons advanced after reporting a 0.7% rise in first quarter like-for-like sales, excluding fuel, and a 1.2% rise including fuel. It was the second consecutive quarter of positive like-for-like sales growth for the chain, which had been flagging in recent years.
Software company Sage was sitting lower after it reported a drop in first-half pre-tax profit despite a rise in revenue, as it announced an agreement to buy a 20.7% stake in Fairsail.
Rolls-Royce declined as it warned that 2016 continues to be a “challenging year overall as we sustain investment and start to transition major products in Civil Aerospace, and tackle weak markets in Marine”.
Smith & Nephew dropped after saying weakness in China offset a solid performance in the US in its first quarter revenue.
