Leading shares are on the slide again after a mini-revival on Thursday, despite support from the mining sector in the wake of the latest Chinese data.
The FTSE 100 is currently down 27.08 points at 6933.55, amid the uncertainty over the UK general election, the continuing discussions between Greece and its creditors to try and solve the country’s financial crisis and a strengthening euro as the receding prospect of US rate rises hits the dollar.
The UK manufacturing purchasing managers index came in at a much worse than expected 51.9 in April, its biggest one month fall since February 2013 and well below the expected 54.6.
European markets are closed for May Day, but Wall Street will open later, with investors looking at the latest ISM manufacturing data after this week’s weak GDP figures.
News that China had reported a manufacturing purchasing managers index of 50.1 in April, unchanged from the previous month, helped support mining shares. With copper set to record its biggest weekly gain in more than two years, Anglo American has added 40.5p to 1145.5p, Rio Tinto has risen 99.5p to 2984.5p and BHP Billiton is 42p better at £16.03.
Tony Cross, market analyst at Trustnet Direct, said:
Traders are struggling to find much enthusiasm for equities as the last session of the week gets underway. Many markets across Europe are closed to mark Labour Day so this could suppress volumes a little too, but it’s worth noting that the heavyweight mining stocks are at least managing to post some gains. That fractionally better than expected Chinese PMI reading has offered the sector another boost.
Lloyds Banking Group is up 2.53p to 79.91p after better than forecast results.
Motor insurers were boosted by positive comment from Barclays analysts, with Admiral up 39p at £15.97 and Esure 11.8p better at 230p. The bank said:
When we initiated on the UK motor insurers last year in our note “No pain, no gain”, our thesis was that we did not believe the market would turn until the insurers felt sufficient pain to force pricing higher. In our view they are now feeling the pain and pricing is therefore poised to inflect. We believe the UK motor market is the first property and casualty market to reach the trough of the pricing cycle, and the improving dynamics will become clear as the year progresses. Although we believe 2015 earnings could still need to come down, this will prove the catalyst for stronger pricing and the focus will quickly shift to improving 2016 earnings, and the stocks could re-rate - more pain, more gain.
We also believe the stocks are defensive, with little Solvency 2 [forthcoming regulatory regime] or interest rate exposure which is likely to be a focus for the wider insurance sector. We are double upgrading esure to overweight with 31% upside to our revised price target of 285p. We are also upgrading Admiral to equal weight, with 2% downside to our price target of 1,523p. Esure is our favoured name within the subsector, as we believe it has been unfairly punished for disappointing since its IPO due to weak growth, but the market inflection could allow it to revisit its IPO aspirations.
Among the fallers investment groups are moving lower. Hargreaves Lansdown is down 23p at £12.07 as HSBC issued a reduce rating but moved its price target from 810p to 890p, while Aberdeen Asset Management has fallen 9.5p to 465.6p despite the same bank lifting its target from 510p to 530p.
