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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: Inflation in focus as geopolitical tensions ease - FTSE closes up 38.06 at 6,779.31
- UK CPI drops to 1.6%
- US housing starts jump 15.7% in July
techMARK 2,800.98 +0.68%
FTSE 100 6,779.31 +0.56%
FTSE 250 15,895.26 +0.63%
It was another positive finish for London's blue chips on Tuesday, which saw a jump at the opening bell followed by relatively steady trading throughout the session, with a slight dip seen late in the morning.
The driving force continued to be the easing of political tensions, although there were reports that the ceasefire between Israel and Hamas has been broken after the launch of three rockets from the Gaza Strip.
Ultimately, the FTSE 100 closed 38.06 points higher at 6,779.31.
With geopolitical tensions no longer taking up as much focus, traders turned their attention to the day's inflation figures, which showed that UK inflation, as measured by the consumer price index (CPI), had dropped to 1.6% in July, compared to 1.9% the previous month and expectations of 1.8%. The figures come ahead of the release of the minutes of the most recent Monetary Policy committee (MPC) meeting on Wednesday.
"Lower levels of inflation take the heat of the Bank of England to hike rates," CMC Markets analyst Jasper Lawler explained.
"This latest report won't have been factored into the decision-making at the latest Bank of England (BoE) meeting, but with core inflation below 2% anyway it seems entirely possible no members of the MPC dissented the decision to keep interest rates unchanged."
Over in the US, inflation climbed 2% year-on-year in July, in line with expectations, after rising 2.1% in June. Consumer prices increased 0.1% in July when compared to a month ago, as forecast, following a 0.3% increase. Excluding food and energy, prices rose 1.9% year-on-year and 0.1% month-on-month.
However, it was the 15.7% jump in housing starts in July that pushed stocks higher.
Rail fares to rise by up to 5.5% from January
UK rail fares will be up to 5.5% more costly on average from January 2015, it was announced following the inflation figure.
Regulated rail prices are pegged to inflation and capped at retail price inflation (RPI) plus 1%, although the "flex" rule allows train operators to lift fares on some routes by an extra 2%.
In other news, the year-on-year rate of home-price appreciation slowed from 10.4% to 10.2% in June, putting the average UK mix-adjusted house price at £265,000, according to the Office for National Statistics (ONS).
Home prices in England again paced gains, rising by 10.7%, nearly doubling the pace of rises seen in the next most buoyant market, Scotland, where the sum being asked of would-be purchasers increased by 6%.
Gains led by retailers and housebuilders
Retailers Kingfisher, Sports Direct and Next were all high risers on Tuesday, while housebuilders also performed well as forecasts for a rate hike were pushed back after the inflation figures.
Persimmon moved higher after pleasing with a 57% jumped in first-half profits, while other stocks such as Barratt Developments were also higher.
However, building materials group CRH underwhelmed with its own interim results. The company swung to a profit in the first half, as favourable weather in Europe and an ongoing recovery in the States helped to offset difficult conditions in the wider Americas region.
Imperial Tobacco was up after it maintained its full-year guidance for "modest" earnings growth despite revenues slipping in the first nine months. Total reported volumes were down 8% in the first three quarters ended 30 June reflecting the company's "stock optimisation programme", while underlying tobacco volumes were 5% lower and so broadly in line with the industry.
Details of BHP Billiton's hotly-anticipated "portfolio simplification" were unveiled on Tuesday morning but failed to excite the market with the stock slipping sharply into the red.
Fellow miners such as Fresnillo, Glencore and Anglo American also fell into negative territory. |
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FTSE 100 - Risers
Kingfisher (KGF) 310.60p +3.74%
Sports Direct International (SPD) 726.50p +3.34%
3i Group (III) 392.00p +3.00%
Barratt Developments (BDEV) 368.60p +2.90%
easyJet (EZJ) 1,335.00p +2.61%
Imperial Tobacco Group (IMT) 2,585.00p +2.34%
Royal Bank of Scotland Group (RBS) 359.40p +2.33%
ITV (ITV) 212.00p +2.17%
GKN (GKN) 351.00p +2.12%
Next (NXT) 7,050.00p +2.03%
FTSE 100 - Fallers
BHP Billiton (BLT) 1,965.00p -4.93%
Fresnillo (FRES) 973.00p -2.99%
Rolls-Royce Holdings (RR.) 1,033.00p -1.99%
CRH (CRH) 1,428.00p -1.92%
Glencore (GLEN) 358.95p -1.41%
Anglo American (AAL) 1,578.50p -1.28%
Rexam (REX) 494.00p -1.02%
G4S (GFS) 263.10p -0.68%
Meggitt (MGGT) 466.50p -0.51%
Aggreko (AGK) 1,740.00p -0.51%
FTSE 250 - Risers
AO World (AO.) 218.00p +8.03%
CSR (CSR) 568.50p +7.26%
Ophir Energy (OPHR) 229.60p +7.09%
Supergroup (SGP) 1,128.00p +5.13%
Wood Group (John) (WG.) 788.50p +4.92%
Ocado Group (OCDO) 369.00p +4.74%
Countrywide (CWD) 530.00p +4.54%
Howden Joinery Group (HWDN) 355.70p +3.46%
Balfour Beatty (BBY) 256.00p +3.23%
Redrow (RDW) 268.20p +3.15%
FTSE 250 - Fallers
Amlin (AML) 434.10p -3.23%
Petra Diamonds Ltd.(DI) (PDL) 192.90p -3.16%
Hochschild Mining (HOC) 160.00p -2.85%
Diploma (DPLM) 656.00p -2.81%
Rank Group (RNK) 163.70p -2.68%
Daejan Holdings (DJAN) 4,854.00p -2.37%
Fisher (James) & Sons (FSJ) 1,389.00p -1.91%
Fenner (FENR) 362.50p -1.71%
Xaar (XAR) 577.50p -1.62%
Telecity Group (TCY) 779.50p -1.52% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks jump after UK, US inflation reports - UK, US inflation falls
- Israel and Palestine extend ceasefire
- Russia sends further aid to Ukraine
FTSE 100: 0.40%
DAX: 0.23%
CAC 40: 0.38%
FTSE MIB: 0.37%
IBEX 35: 0.35%
Stoxx 600: 0.29%
European stocks ended Tuesday's session higher as investors weighed UK and US inflation data.
The UK consumer price index (CPI) grew by 1.6% in the year to July 2014, down from 1.9% in June according to the Office for National Statistics, reflecting a combination of falling commodity prices and intense competition. The consensus estimate had been for an advance of 1.8%.
"Soft inflation is generally good news for consumers especially in a period of weak wage growth," said Centre for Economics and Business Research economist Alasdair Cavalla.
Cavalla added that recent signals suggest the Bank of England (BoE) is likely to wait until next year before raising interest rates.
In the US, inflation climbed at a 2% year-on-year pace in July, in line with expectations, after rising by 2.1% in June.
"The recent slowdown in the pace at which core consumer prices are rising eases some of the pressure on the [Federal Reserve] to start considering increasing interest rates, although only temporarily," said Capital Economics.
The BoE and Federal Reserve release minutes from their latest meetings on Wednesday.
Other US data on Tuesday included housing starts which showed a 15.7% jump in July after a 4% fall a month before, surpassing analysts' estimates for an 8.1% rise.
Meanwhile, the market continued to assess geopolitical tensions which seemed to ease as a ceasefire between Palestine and Israel was extended by 24 hours and as Russia sent further aid to Ukraine.
Balfour Beatty gains on Carillion offer
Balfour Beatty climbed as Carillion increased its offer for the builder.
A.P. Moeller-Maersk rallied after raising its full-year profit forecast, citing higher freight volumes and lower costs.
BHP Billiton slumped after announcing plans to create an independent company comprising its aluminium, coal, manganese, nickel and silver assets.
Imperial Tobacco advanced after reporting a 1% fall in nine-month sales, less than the 2% drop expected by analysts.
ThyssenKrupp edged higher after Handelsblatt reported that the German steelmaker wants to sell its stairways business and a submarine shipyard.
John Wood Group gained as the oil-and-gas engineer posted a rise in first-half pre-tax profit that beat market expectations.
The euro fell 0.34% to $1.3318.
Brent crude futures rose 0.16% to $101.77 per barrel, according to the ICE. |
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| | US Market Report | | US open: Stocks gain after US inflation and housing starts data US stocks advanced as reports showed inflation slowed and housing starts rose.
US inflation climbed 2% year-on-year in July, in line with expectations, after rising 2.1% in June. Consumer prices increased 0.1% in July when compared to a month ago, as forecast, following a 0.3% increase. Excluding food and energy, prices rose 1.9% year-on-year and 0.1% month-on-month.
"The recent slowdown in the pace at which core consumer prices are rising eases some of the pressure on the [Federal Reserve] to start considering increasing interest rates, although only temporarily," said Capital Economics.
On Wednesday the Fed is due to release minutes from its 29-30 July policy meeting, which may provide further clues on the timing of the first rate hike.
Meanwhile, US housing starts jumped 15.7% in July after falling 4% a month before, surpassing analysts' estimates for an 8.1% gain.
Barclays Research said it viewed the data as "more evidence that the moderate recovery in housing activity is back on track after the disruption in recent months caused by higher mortgage rates and adverse winter weather".
Also providing a lift to global stocks was a cooling of tensions in Ukraine and Israel.
A ceasefire between Palestine and Israel has been extended by 24 hours in an attempt to reach a truce while Russia sent further aid to Ukraine.
Home Depot, Elizabeth Arden
Home Depot rallied after reporting second quarter earnings that topped analysts' estimates.
Elizabeth Arden slumped after saying fall in sales of celebrity fragrances was lower than expected in the fourth quarter.
Aeropostale edged higher after saying Julian Geiger has returned as chief executive.
The US 10-year yield fell one basis point to 2.38%.
West Texas Intermediate crude futures dropped 0.57% to $95.86 per barrel, according to the ICE. |
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| | Broker Tips | | Broker tips: BHP Billiton, Rio Tinto, Persimmon BHP Billiton's proposed demerger may have disappointed some shareholders with the absence of a one-off capital return, but The Share Centre still rates the mining giant as a 'buy' on the back of its diversification and capital efficiency.
"Despite the demerger plans the company will remain one of the most diversified large cap miners. Capital efficiency after the demerger should improve and management are targeting to increase the dividend pay-out ratio from the current 48%."
Rio Tinto's heavy exposure to iron ore shouldn't necessarily be seen by the market as a bad thing, according to Investec. The broker has maintained its 'hold' rating for the stock, but hiked its target from 3,220p to 3,552p.
It said that the iron ore division's "exaggerated operating margins" means that Rio Tinto has the capacity to withstand high price volatility.
Persimmon is in an "extremely healthy" position, according to Hargreaves Lansdown Stockbrokers, despite concerns about the stock's valuation and a potential cooling of the UK housing market.
"Also showing signs of improvement is the market consensus, which has recently strengthened to a 'buy'," it said. | | |
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