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| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London close: FTSE ends modestly higher ahead of Fed statement - All eyes on Fed
- Unanimous vote by BoE MPC
- Investors poised for "imminent" takeover bid
techMARK 2,804.94 +0.37%
FTSE 100 6,778.56 +0.17%
FTSE 250 15,624.20 +0.25%
The FTSE ended today's session higher ahead of the latest statement release by the Federal Reserve and following the publication of the minutes of the latest meeting of the Bank of England's (BoE) Monetary Policy Committee (MPC).
With ex-dividend stocks slightly offsetting further gains by both oil stocks and potential bid target Shire, the top tier index closed up 11.79 points at 6,778.56.
The BoE unveiled the minutes of its most recent MPC meeting, at which members voted unanimously to maintain interest rates at 0.5% after agreeing that "it would be necessary to see more evidence of slack being absorbed before an increase in Bank Rate would be warranted".
However, a speech given by rate-setter Martin Weale revealed his belief there is evidence to indicate a need for a tighter policy profile than that given in its May forecast.
Weale, who is an external member of the MPC, said that the potential for unemployment to fall more quickly than the committee currently anticipates was even by itself suggestive that policy should be tightened.
"Investors are braced for a potentially hawkish statement from the Federal Reserve today, having had the Bank of England minutes this morning as a warm-up act," said Alastair McCaig, Market Analyst at IG.
"The gains made today on the FTSE have been founded on energy firms, which at the moment are benefiting from higher oil prices. Despite this, traders are keeping one eye on the Iraq situation at all times, with the uncomfortable knowledge that higher oil prices will not be beneficial for the global economy."
The Fed is expected to announce a further tapering of quantitative easing when it wraps up its policy meeting later this evening.
Analysts predict the central bank will cut another $10bn off its monthly bond purchase programme to take the total to $35bn.
However, following Tuesday's release of the latest US inflation data, which showed prices rose more than forecast, some analysts now believe the Fed may consider raising interest rates sooner than it had been expecting.
"Yesterday's US CPI numbers has invited some concern that, even here, tightening might come sooner rather than later, which would be more plausible given that CPI inflation is over 2%, and unemployment is continuing to fall," according to Michael Hewson at CMC Markets.
US asked to launch air strikes by Iraq
The BBC was this afternoon reporting that Iraq has requested air strikes from the US. It quoted the US military commander General Martin Dempsey as saying: "We have a request from the Iraqi government for air power".
The request follows an attack by jihadist militants on Iraq's largest oil refinery, located north of Baghdad.
Shire investors anticipating takeover bid "imminently"
Shire's shares have spiked higher on rumours that Allergan could bid for the company in an effort to fend off a hostile takeover attempt by Valeant Pharmaceuticals. Bloomberg cited an analyst at SunTrust Robinson Humphrey who said that a bid is "imminent" and "makes strategic sense" for the US company.
Oil stocks Royal Dutch Shell, BP and BG Group were all making gains as crude prices continued to climb.
Meanwhile, heavyweight utilities groups Severn Trent and United Utilities were both trading lower this morning after going ex-dividend.
WPP was also in the red after Chief Executive Martin Sorrell reported that trading in May was not as strong as April, although it was satisfactory, and he said second quarter trading could surpass its robust set of results in the previous three months. |
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FTSE 100 - Risers
Shire Plc (SHP) 3,785.00p +3.42%
Associated British Foods (ABF) 3,050.00p +2.01%
Royal Dutch Shell 'B' (RDSB) 2,533.00p +1.77%
BP (BP.) 514.40p +1.64%
Royal Dutch Shell 'A' (RDSA) 2,407.50p +1.52%
Vodafone Group (VOD) 198.10p +1.46%
Mondi (MNDI) 1,070.00p +1.23%
BHP Billiton (BLT) 1,874.50p +1.19%
Anglo American (AAL) 1,437.50p +1.09%
Rio Tinto (RIO) 3,079.50p +1.00%
FTSE 100 - Fallers
United Utilities Group (UU.) 861.50p -2.77%
IMI (IMI) 1,526.00p -2.43%
Severn Trent (SVT) 1,928.00p -2.08%
WPP (WPP) 1,262.00p -2.02%
Aberdeen Asset Management (ADN) 434.60p -1.70%
Smith & Nephew (SN.) 1,053.00p -1.68%
Diageo (DGE) 1,858.00p -1.61%
Babcock International Group (BAB) 1,171.00p -1.60%
Sainsbury (J) (SBRY) 317.10p -1.49%
William Hill (WMH) 336.10p -1.44%
FTSE 250 - Risers
Rank Group (RNK) 168.00p +5.59%
Fisher (James) & Sons (FSJ) 1,340.00p +4.69%
RPS Group (RPS) 276.70p +4.42%
NMC Health (NMC) 465.00p +4.35%
Keller Group (KLR) 961.00p +4.34%
Euromoney Institutional Investor (ERM) 1,147.00p +4.27%
Barr (A.G.) (BAG) 631.00p +3.44%
Foxtons Group (FOXT) 287.50p +3.42%
IP Group (IPO) 183.00p +3.33%
Ferrexpo (FXPO) 130.50p +3.16%
FTSE 250 - Fallers
Xaar (XAR) 500.00p -6.89%
3i Group (III) 394.20p -4.25%
African Barrick Gold (ABG) 214.10p -4.21%
Telecom Plus (TEP) 1,384.00p -3.62%
Restaurant Group (RTN) 555.00p -3.23%
Brown (N.) Group (BWNG) 423.50p -2.69%
Ted Baker (TED) 1,746.00p -2.35%
Grafton Group Units (GFTU) 538.00p -2.27%
Paragon Group Of Companies (PAG) 351.50p -2.12%
Redrow (RDW) 249.80p -2.04% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks mixed ahead of Fed policy - Fed policy decision looms
- BoE meeting minutes released
- Iraq asks US to launch air strikes
FTSE 100: 0.17%
DAX: 0.10%
CAC 40:-0.13%
FTSE MIB: 0.15%
IBEX 35: 0.49%
Stoxx 600: -0.08%
European stocks were mixed before the US Federal Reserve's policy decision.
The Fed is forecast to announce a further tapering of quantitative easing when it wraps up its policy meeting later this evening. Analysts predict the central bank will cut another $10bn off its monthly bond purchase programme to take the total to $35bn.
However, following Tuesday's release of the latest US inflation data, which showed prices rose more than forecast, some analysts now believe the Fed may consider raising interest rates sooner than it had been expecting. US consumer prices rose by 0.4% month-on-month and 2.1% year-on-year in May, surpassing analysts' estimates.
"Yesterday's US CPI numbers has invited some concern that, even here, tightening might come sooner rather than later, which would be more plausible given that CPI inflation is over 2%, and unemployment is continuing to fall," according to Michael Hewson at CMC Markets.
In March, policy makers estimated that the interest rate, now close to zero, would rise to 1% at the end of 2015 and to 2.25% a year later.
Meanwhile, Fed Chair Janet Yellen will also today release a new set of quarterly predictions for unemployment, inflation, economic growth and the benchmark federal funds rate.
BoE meeting minutes
Bank of England policymakers voted unanimously to hold interest rates this month, but expressed surprise that markets had underestimated the chance of a hike later this year.
Members of the Bank's Monetary Policy Committee all voted to keep base rates at 0.5% and to leave quantitative easing unchanged at £375bn, minutes of the meeting on June 4th-5th showed.
In his Mansion House speech last week, BoE Governor Mark Carney suggested that an increase in interest rates was a possibility as soon this year given the pick-up in the economy.
"Minutes from the Bank of England struck an odd tone, neither entirely backing up Mark Carney nor completely distancing themselves from his Mansion House speech," IG analyst Chris Beauchamp noted.
"The bank might think the market has become too relaxed about a rate hike in 2014, but on the back of today's minutes most policymakers are still worried that growth is too weak. To raise rates only to cut them again would be the height of folly, even without considering the deleterious impact on the bank's reputation."
Iraq asks US to launch air strikes
Iraq has urged the US to launch air strikes against rebel insurgents who have seized several cities.
"We have a request from the Iraqi government for air power," confirmed top US military commander Gen Martin Dempsey.
The news came after jihadist militants launched an attack on Iraq's biggest oil refinery north of Baghdad. Oil majors BP and ExxonMobil have evacuated staff from Iraq.
Brent crude futures climbed $0.360 to $113.860 per barrel, according to the ICE.
Royal Dutch Shell and BG Group gained as the news of the Iraq conflict pushed up oil prices.
Daily Mail, Boliden
Daily Mail and General Trust rallied as its Zoopla Property Group unit rose on its stock-market debut.
Boliden surged after Nordea upgraded the shares to 'buy' from 'sell' citing earnings growth from the second quarter.
Rheinmetall jumped on reports the German defence company will sign a €2.7bn tank deal with Algeria.
Vodafone gained after the Financial Times reported that the carrier and 02 are in talks to offer Amazon.com's new smartphone to customers.
Bayerische Motoren Werke was higher following reports the maker of luxury vehicles plans to cut costs by €3bn to €4bn a year until 2020.
The euro rose 0.17% to $1.3570. |
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| | US Market Report | | US open: Stocks little changed before Fed policy decision US stocks were little changed ahead of the Federal Reserve's monetary policy decision.
The Fed is expected to announce a further tapering of quantitative easing when it wraps up its policy meeting later this evening.
Analysts predict the central bank will cut another $10bn off its monthly bond purchase programme to take the total to $35bn.
However, following Tuesday's release of the latest US inflation data, which showed prices rose more than forecast, some analysts now believe the Fed may consider raising interest rates sooner than it had been expecting.
US consumer prices rose by 0.4% month-on-month and 2.1% year-on-year in May, surpassing analysts' estimates.
"Yesterday's US CPI numbers has invited some concern that, even here, tightening might come sooner rather than later, which would be more plausible given that CPI inflation is over 2%, and unemployment is continuing to fall," according to Michael Hewson at CMC Markets.
In March, policy makers estimated that the interest rate, now close to zero, would rise to 1% at the end of 2015 and to 2.25% a year later.
Meanwhile, Fed Chair Janet Yellen will also today release a new set of quarterly predictions for unemployment, inflation, economic growth and the benchmark federal funds rate.
Iraq
Iraq's military said it has repelled an attack on the biggest oil refinery in Baghdad, military spokesman Qassim al-Moussawi told Associated Press. However, there was no independent confirmation of his claims.
Oil majors BP and ExxonMobil evacuated staff from Iraq amid the turmoil.
The news comes as the government fights against the Islamic State in Iraq and the Levant (ISIS) and its Sunni Muslim allies in Diyala and Salahuddin provinces, after they took over the second city, Mosul, last week.
West Texas Intermediate crude futures climbed $0.319 to $106.700 per barrel, according to the ICE, amid fears that the crisis could hurt oil supplies.
Adobe, FedEx
Adobe advanced as the company reported a rise in sales and profit in the three months to end of May, exceeding analysts' estimates.
FedEx gained as the operator of the world's largest cargo airline posted fiscal fourth-quarter earnings of $2.46 a share, beating forecasts of $2.36.
ConAgra declined as the packaged-food company cut its earnings forecast amid slow sales of consumer foods and shrinking profit at its private-label business.
Cisco jumped as Morgan Stanley rated the San Jose, California-based company with an 'overweight' recommendation.
The US 10-year yield fell two basis points to 2.63%. |
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| | Broker Tips | | Broker tips: BT, Wm Morrison, Berkeley... BT and Virgin Media owner Liberty Global offer investors the best way to cash in on fixed-line telecom companies' assault on the mobile market, according to broker Goldman Sachs.
Goldman said fixed-line players such as BT, which plans to launch business and household mobile products later this year, were driving convergence in the market by using their superior assets to enter mobile.
Shore Capital has repeated its 'sell' rating for supermarket group Wm Morrison after the recent announcement that 2,600 store managers are likely to lose their jobs.
"As is often the case with such announcements, senior management pledges that the changes are likely to lead to an improvement in customer service; we will see whether this is the case and also whether in-store morale and standards can be maintained through what is a demonstrably challenging and difficult time for all concerned."
Numis Securities has upgraded housebuilder Berkeley Group from 'hold' to 'add', saying that the stock is "too cheap" after a broadly in-line set of annual results.
"In our view, Berkeley is too cheap, in keeping with the wider housebuilding sector, although the share price may be held back over the next year due to political rhetoric concerning the London housing market in the run up to the General Election," Numis said.
The price of Zoopla's initial public offering (IPO) on Wednesday was a "decent result" for Daily Mail & General Trust (DMGT), according to Investec which maintained a 'buy' rating for the media group.
"Given recent DMGT weakness, we think shares should recover today as value has been crystallised [...] and DMGT receives new maximum cash inflow of £190m," the broker said.
Broker Investec believes the de-rating on street fashion chain SuperGroup is "overdone" as the long-term growth story remains intact.
Shares in the company, which is behind the SuperDry fashion label, are down 39% from 1411p when it emitted a weak sales update in early May, which "seems excessive for a less than 2% cut in consensus earnings and to us implies the market is expecting a profit warning", wrote analysts.
UBS has slashed its target for Xaar by over two-fifths from 950p to just 550p after the digital inkjet printing company's sales warning, saying that near-term uncertainties overshadow the long-term potential of the business.
"As the ceramics market nears a saturation point and the competition fights for market share, we are wary that near-term earnings revisions are more likely to be downwards than up," UBS said. | | |
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