Stock markets globally were starting November on the front foot, with Asian markets and London mining shares boosted by speculation that China is considering ending its zero-Covid policy.
The FTSE 100 index opened up 103.79 points, 1.5%, at 7,198.32. The FTSE 250 was up 258.82 points, 1.5%, at 18,148.75, and the AIM All-Share rose 7.10 points, 0.9%, at 813.23.
The Cboe UK 100 opened up 1.3% at 719.48, the Cboe UK 250 added 1.3% at 15,564.86, and the Cboe Small Companies opened down 0.4 of a point at 12,335.17.
In European equities on Tuesday, the CAC 40 in Paris opened up 1.6%, while the DAX 40 in Frankfurt was up 1.0%.
In Asia, the Shanghai Composite closed up 2.6%, and the Hang Seng index in Hong Kong gained 5.1%. The Japanese Nikkei 225 index closed up 0.3% in Tokyo. The S&P/ASX 200 stock index in Sydney closed up 1.7%.
The rally in Shanghai and Hong Kong followed unconfirmed posts on Chinese social media saying officials were putting together a committee to discuss how to move the country away from its economically damaging zero-Covid policy, AFP reported.
The dollar pulled back early Tuesday in London, as the two-day meeting of the US Federal Open Market Committee starts on Tuesday.
Sterling was quoted at $1.1531, higher than $1.1500 at the London equities close on Monday. The euro traded at $0.9933 early Tuesday, up from $0.9885 late Monday. Against the yen, the dollar was quoted at JP¥147.76, down versus JP¥148.61.
While a 75 basis hike point is widely expected to be announced on Wednesday, analysts will be watching closely for any hints as to the central bank’s thinking about future rate hikes.
‘The Fed starts its two-day meeting, and expectations are mixed. The Fed could call the end of the aggressive rate tightening and signal slower rate hikes to enter the final phase of policy tightening, before pausing,’ said Swissquote Bank’s Ipek Ozkardeskaya.
‘But there is a risk in there. The risk is, because investors are waiting in ambush for the Fed to soften its tone, any sign of a less hawkish Fed could send both the bond and equity markets rallying. And that’s exactly what the Fed doesn’t want to happen. A broadly cheerful market rally would boost inflation expectations, and inflation.’
To follow on Thursday will be the interest rate decision by the Bank of England.
Where the central bank decides to set rates will be key in determining the trajectory of the UK housing market, which is already showing signs of struggling in the aftermath of the fated mini-budget.
According to Nationwide’s UK house price index, house prices edged down 0.9% in October from September, marking the first monthly decline since July of 2021. Annual house price growth also slowed sharply to 7.2% in October, from 9.5% in September
‘Higher borrowing costs have added to stretched housing affordability at a time when household finances are already under pressure from high inflation, said Nationwide’s chief economist Robert Gardner, adding: ‘The market looks set to slow in the coming quarters.
‘Inflation will remain high for some time yet and (the base rate) is likely to rise further as the Bank of England seeks to ensure demand in the economy slows to relieve domestic price pressures.’
On the London Stock Exchange, Ocado shares surged 20%. The stock is still down more than 60% in the year so far, however.
The online grocer announced a partnership between Ocado Solutions and Lotte Shopping, the largest retail affiliate of the South Korean conglomerate Lotte Group.
The pair will develop a network of customer fulfilment centres in South Korea, with six planned by 2028. Ocado plans to roll out its in-store fulfilment solution in 2024, with the first CFC to go live in 2025.
No financial details were provided, but Ocado said: ‘Ocado Group expects this deal to create significant long term value to the business. The impact of this transaction should be negligible on earnings in the current financial year as no cash fees will be recognised in revenue until operations commence.’
BP shed 0.5%.
The oil major continued ‘performing while transforming’ in the third quarter of the year. It recorded $57.81 billion in revenue during the quarter, up from $37.87 billion a year prior.
It swung to a pretax profit of $1.98 billion from a loss of $495 million a year before. BP also swung to a replacement cost profit of $23 million from a loss of $2.93 billion a year before. Underlying RC profit rose to $8.15 billion from $3.32 billion.
BP announced a dividend of 6.006 cents per share to be paid in December. It expects to deliver an annual increase in dividend per share of 4% though 2025 and conduct £4.0 billion per year in share buybacks, assuming at least $60 a barrel Brent.
Brent oil was trading at $94.40 a barrel early Tuesday, higher than $92.24 late Monday.
BP said it expects oil prices to remain elevated in the fourth quarter, due to OPEC+ cutting supply, however it expects global gas prices to be more volatile.
Gold was quoted at $1,648.37 an ounce, higher than $1,638.60 .
FTSE 100 miners saw a strong start, with Anglo American up 4.0%, Glencore up 3.8%, Rio Tinto up 3.6% and Antofagasta up 3.6%. The miners were benefiting from the zero-Covid policy speculation, as China is a major importer of industrial metals.
In the FTSE 250 index, Ferrexpo added 4.6%. The iron ore exporter said it has partially resumed operations in Ukraine, as repair work progresses following a Russian missile strike in October.
At the other end of the midcaps was hybrid workspace firm IWG, down 3.0%. It said it expects adjusted earnings before interest, tax, depreciation and amortisation to be towards the lower end of market estimates of £304 million to £380 million.
IWG reported revenue growth of 25% in the third quarter compared to the previous year, as global demand for hybrid working solutions remains strong.
On AIM, Orisirium Technology jumped 84%. The cloud-based cybersecurity company said bookings for the nine months to September 30 were up to £2.5 million, compared to £1.6 million a year before.
‘We have maintained our focus on attracting new customers alongside expanding with existing customers, as evidenced by our significant, multi-year contract renewals with customers in the financial services and IT sectors previously announced in Q3,’ said CEO David Guyatt.
Still to come in Tuesday’s economic events calendar, there is a slew of manufacturing PMI readings, including from the UK at 0930 GMT and the US at 1345 GMT.
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