New Model Adviser - For Professional Investors

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

China growth buoys FTSE as ITV rallies on new boss

China growth buoys FTSE as ITV rallies on new boss

The FTSE 100 received a boost from better-than-expected growth figures from China, setting the country on course for its first year-on-year acceleration in economic expansion since 2010.

China's economy grew by 6.9% in the second quarter, ahead of the 6.8% expected. Retail sales were also stronger than expected, growing 11% year-on-year, while fixed asset investment was up 8.6%.

ING economist Iris Pang revised her forecast for China's annual growth to 6.8% on the news. This would mark a jump from 2016's 6.7% expansion, and the first acceleration in growth since 2010. It would also beat the Chinese government's target of 6.5% growth this year.

'Gross domestic product (GDP) and other data confirm our view that China is now a consumption driven economy,' said Pang. 'Consumption and exports will continue to drive growth in the second half of the year, and these two categories in GDP will continue to support industrial production.'

Shilen Shah, bond strategist at Investec Wealth & Investment, said the figures showed China's economy was maintaining momentum.

'Despite concerns over China's so-called shadow banking system, the global economic recovery seems to have supported second quarter GDP,' he said.

'Retail sales were somewhat stronger; however the underlying data suggests that external demand and capital expenditure remain the key drivers of growth.'

The FTSE 100 rose 13 points, or 0.2%, to 7,392, with mining stocks among the biggest risers, buoyed by the strong data from China, the world's top metals consumer.

Anglo American (AAL) rose 2.3% to £11.43, Glencore (GLEN) was up 2.2% at 322.9p, Antofagasta (ANTO) added 1.9% to 874.5p and BHP Billiton (BLT) traded 1.2% higher at £13.21.


But miners were beaten to the top of the index by ITV (ITV), up 3.1% at 180.3p, after the broadcaster appointed EasyJet (EZJ) boss Carolyn McCall, former chief executive of Guardian Media Group, as its new chief executive.

Analysts welcomed the news. 'We are reassured by this morning's announcement given McCall's experience of running a major media business and leading the growth of an international FTSE 100 company,' said Shore Capital analyst Roddy Davidson.

Jefferies analyst Tamsin Garrity said McCall boasted 'solid media and commercial experience'. 'McCall has understanding of the commercial side of the business, which complements a creative chairman at ITV, and has weathered some tougher times at EasyJet while trebling the share price,' she said.

HS2 provides Carillion respite

The FTSE 250 was also in positive territory, led by Carillion (CLLN), rebounding from lows on news the engineering and infrastructure company had been awarded two contracts as part of the HS2 high speed rail project.

The shares jumped 22.2%, providing some small relief to shareholders who have seen their investment lose two-thirds of its value, even with today's rally, after a profit warning last week.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Comment & analysis