MARKET REPORT: New Year Beijing bounce for stock markets as China central bank pumps an extra £87bn into the economy
- Chinese Central Bank gives the market a whooping £87billion kick-start
- Move comes off the back of the US-China trade war and a weak year for the SSE
- FTSE, DAX, and the DOW were nudged up as global markets reacted to the move
Stock markets began the new decade in buoyant mood, with a sea of green on traders’ screens.
Shares jumped after Beijing tried to kick-start growth, with its central bank pumping an extra £87 billion into the economy.
This alleviated concerns that the world’s second-biggest economy could slow down further in 2020, on the back of its worst year for almost three decades.
An investor looks at his mobile phone in front of a board showing stock information at a brokerage office in Beijing, China January 2, 2020
China has been hit by a protracted trade war with the US, which has imposed billions of dollars of tariffs on its goods.
This spat between the world’s two biggest economies has spooked investors, although the countries are set to sign an initial ‘phase one’ trade agreement later this month in a bid to resolve their differences.
China’s plans and the fall in the value of the pound (down 0.88pc against the US dollar and 0.58 per cent against the euro) provided a shot in the arm for shares in British companies. The FTSE 100 nudged up 0.8 per cent, or 61.86 points, to 7604.30, while the FTSE 250 rose by 1 per cent, or 224.87 points, to hit 22108.29. Many of the biggest listed companies in Britain make the majority of their money overseas, so are given a boost when sterling weakens.
The biggest riser on the blue-chip index was travel giant Tui (up 3.9 per cent, or 37.4p, to 991.2p) which has profited from the collapse of rival Thomas Cook.
Barclays, which was up 3.1 per cent, or 5.56p, to 185.2p, and mining giant Antofagasta, which climbed 3.1 per cent, or 28.2p, to 945p, were also both in traders’ good books.
Elsewhere in Europe, Germany’s Dax index rose 1 per cent, while France’s CAC 40 was up 1.1 per cent.
US markets kicked off the year at record levels as all three major indices – the S&P 500, the Dow and the Nasdaq Composite – hit new highs in morning trading.
The economic stimulus announced by Beijing added to optimism in the US, fuelled by the easing trade tensions.
Yesterday evening the Nasdaq was up by 1.3 per cent, the Dow by 1.1 per cent and the S&P by 1 per cent.
The liquidity injection sent Chinese stocks upwards sending global markets into the green
But back in the UK there was more woe for thousands of investors in Tullow Oil.
Shareholders were unimpressed by the struggling company’s latest update that it had not discovered as much oil as thought at a well in Guyana, South America.
Shares plunged 6.8 per cent, or 4.34p, to 59.66p. The well will now be plugged and abandoned due to difficulties in making it commercially viable.
STOCK WATCH: Tasty
Tasty, the owner of Dim T and Wildwood restaurants, shot up 41 per cent, or 1.1p, to 3.85p after announcing the £2m sale of a restaurant by the River Thames in London, to reduce exposure ‘where it is experiencing increasing property and labour costs’.
It will use the money to pay off bank debts and carry out refurbishments. Fourth-quarter sales were in line with expectations and, ‘with the continued assistance of landlords’, it said it should meet full-year market forecasts.
Yesterday’s disappointment will seem like only a minor setback for Tullow’s long-suffering investors, who endured a torrid 2019. Last month shares tumbled 72 per cent after it cut its production forecast at its flagship oil and gas fields in Ghana, scrapped its dividend and saw the chief executive and exploration chief both quit.
Trainer retailer JD Sports promised investors that it was going to propose a new pay policy at this summer’s shareholder meeting, after almost 20 per cent of them last year opposed a proposed £6 million bonus for executive chairman Peter Cowgill.
Shares dipped 0.7 per cent, or 6p, to 831.4p as shareholders awaited the outcome.
A boost for IP Group came a little too late for investors in Neil Woodford’s former funds.
The fallen fund manager had owned a hefty stake in IP Group, which helps turn new technologies into businesses. But he sold it last September as he tried to save his crumbling investment empire.
Yesterday the stock climbed 5.6 per cent, or 4p, to 75p as it announced one of its portfolio companies, Oxford Nanopore, had bagged £109.5 million of new money.