London close: Miners surge, analysts now see more hawkish Fed

1st Jul 2014 16:59

- FTSE closes up 58.98 points at 6,802.92- Miners surge, Royal Mail hit by broker comment- UK, Chinese, US PMIs showed improvementtechMARK 2,832.56 +0.54%FTSE 100 6,802.92 +0.87%FTSE 250 15,840.87 +0.75%The mining sector lifted the FTSE to a strong finish today, with the sector driven higher by a decent set of manufacturing figures out from China overnight. The top tier index closed up 58.98 points at 6,802.92. The National Bureau of Statistics said that the official Chinese manufacturing PMI edged higher from 50.8 in May to 51.0 last month, as expected by analysts. This was its fourth straight monthly improvement and the highest since December 2013.Nikolaus Keis at Unicredit highlighted the broad-based nature of the improvement reflected by the details of the Chinese report and the better tone to business sentiment as denoted by the rising new orders-to-inventory ratio.Chris Beauchamp, Market Analyst at IG, said: "A strong start in the US has given the FTSE the momentum to add to its morning gains, as traders bask in the July sunshine. Investors have had to be very patient with the FTSE 100 in the first half, with much activity but little real progress. Hope springs eternal however, and their patience may be rewarded if the mining sector can continue to prop up the broader index."Market sentiment somewhat dividedNot everyone was of a similar mind however. Thus, the Financial Times' James Mackintosh called attention today to the fact that there was no identifiable link between future returns and the dispersion of valuations in equities. That is to say, central banks' liquidity injections were lifting all boats in an indiscriminate manner, perhaps much as seemed to be the case back in 2007.For his part, RBS's Alberto Gallo believes the US Fed will have to sing a more hawkish tune later this year. Somewhat less aggressive were economists at Capital Economics who on Tuesday brought forward their call for the first hike in the Fed funds rate to March 2015, from mid-2015.As an aside, RBS notes that they have been buying protection against the impact of a more hawkish Fed on the bonds of UK retailers.Manufacturing surveys bolster stocksThe upbeat start in US trading on Tuesday was driven by the release of largely in-line readings on the state of the US manufacturing sector.The widely-followed ISM manufacturing sector purchasing managers' index slipped to a reading of 55.3 for June after a print of 55.4 in May (consensus: 55.5), which Capital Economics said was "still consistent with annualised GDP growth rebounding to almost 3% in the second quarter".That came as US construction spending showed an increase of 0.1% month-on-month during May, to reach $956.1bn, notably below the consensus estimate for an increase of 0.5%.Back in the UK, the manufacturing sector kept pushing unexpectedly ahead in June, reaching its second highest level of the last 40 months.The PMI rose to 57.5, beating economists' forecasts for a retreat to 56.3.Miners send FTSE charging higher Lifted by the Chinese PMI data, Fresnillo, Anglo American, Rio Tinto, BHP Billiton, Glencore and Randgold Resources were all strong risers in today's session. Sports Direct came off recent declines, which resulted from investors' negative reaction to the group's recently announced bonus scheme that controversially includes founder Mike Ashley.Meanwhile, Royal Mail was hit by an 'underperform' rating from Jefferies Group, whie Espirito Santo Investment Bank Research reiterated its 'neutral' stance. Supermarket group Wm Morrison, which has a long-term partnership with Ocado, fell in sympathy today, along with rivals J Sainsbury and Tesco, which both have significant online offerings.easyJet continued to nosedive after Bank of America yesterday cut its price target and lowered its outlook for the airline, blaming its decision on higher fuel costs and profit warnings amongst other stocks in the sector.FTSE 100 - RisersAnglo American (AAL) 1,487.00p +3.99%Fresnillo (FRES) 898.50p +3.04%Rio Tinto (RIO) 3,202.50p +3.02%Sports Direct International (SPD) 727.50p +2.97%BHP Billiton (BLT) 1,944.50p +2.91%Travis Perkins (TPK) 1,680.00p +2.56%CRH (CRH) 1,537.00p +2.40%Glencore (GLEN) 333.20p +2.35%Bunzl (BNZL) 1,659.00p +2.28%Randgold Resources Ltd. (RRS) 4,983.00p +2.26%FTSE 100 - FallersMorrison (Wm) Supermarkets (MRW) 180.20p -1.74%Royal Mail (RMG) 491.20p -1.56%TUI Travel (TT.) 392.00p -1.51%Shire Plc (SHP) 4,510.00p -1.31%easyJet (EZJ) 1,349.00p -1.17%Imperial Tobacco Group (IMT) 2,609.00p -0.80%InterContinental Hotels Group (IHG) 2,416.00p -0.71%Associated British Foods (ABF) 3,032.00p -0.56%WPP (WPP) 1,267.00p -0.55%Intertek Group (ITRK) 2,737.00p -0.44%FTSE 250 - RisersAfrican Barrick Gold (ABG) 220.60p +7.24%AO World (AO.) 270.00p +4.85%Greencore Group (GNC) 277.00p +4.29%UDG Healthcare Public Limited Company (UDG) 356.50p +4.09%Keller Group (KLR) 958.00p +4.02%Entertainment One Limited (ETO) 322.00p +3.87%Rank Group (RNK) 173.30p +3.71%BlackRock World Mining Trust (BRWM) 479.80p +3.61%St. Modwen Properties (SMP) 371.10p +3.49%Cranswick (CWK) 1,309.00p +3.48%FTSE 250 - FallersOcado Group (OCDO) 355.00p -4.39%Genus (GNS) 1,110.00p -3.23%AL Noor Hospitals Group (ANH) 991.50p -2.98%Investec (INVP) 524.00p -2.78%NMC Health (NMC) 487.30p -2.54%Fidessa Group (FDSA) 2,165.00p -2.21%Tullett Prebon (TLPR) 258.80p -2.19%Infinis Energy (INFI) 225.00p -2.13%Exova Group (EXO) 241.00p -2.03%Just Eat (JE.) 250.30p -1.84%NR