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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: ECB speculation, BoE minutes spark surge in UK stocks Expectations for continued loose monetary policy in the UK and hopes for government bond purchases in the Eurozone gave stock markets a big lift on Wednesday, with London's FTSE 100 rising to its highest in nearly seven weeks. Well-received trading updates from Pearson and SABMiller, and strong gains from oil and gas stocks, pushed the FTSE 100 up 1.6% to 6,728 by the close. The index has not closed above the 6,700 mark since 5 December.
Sentiment was boosted by speculation that the European Central Bank (ECB) will implement full-blown quantitative easing (QE) in an effort to boost growth and lift the Eurozone out of deflation.
Gains were extended by an apparent leaked report from the ECB that it is considering a QE programme of €50bn per month for at least 12 months, more than some analysts had expected.
"The hours are being counted down to the ECB meeting and the rumour mill is going into overdrive," said analyst Chris Beauchamp from IG.
However, Beauchamp said the increased optimism that ECB president Mario Draghi will make a big announcement on Thursday just "increases the chance of disappointment". He said: "It might be the ECB's last chance to regain control of the situation, so Mr Draghi has to make every shot count."
The Bank of England revealed on Wednesday that its vote this month to keep the Bank Rate at the record-low level of 0.5% was unanimous, surprising investors as two previously dissenting members - Martin Weale and Ian McCafferty - changed their minds after calling for a rate hike for the previous five months.
The minutes "may very well fuel belief that the Bank of England will not be raising interest rates until 2016", said economist Howard Archer from IHS Global Insight.
Pearson impresses, oil and gas stocks gain
Pearson, the Financial Times and education publisher, rose strongly after guiding to higher profits in 2015 as it maintained its forecast for results last year. Adjusted earnings per share should rise to 75p-80p this year, compared with an estimated 66p in 2014.
Oil and gas stocks were on the rise as crude prices jumped 3% on the back of speculation that US drilling may slow, easing the supply glut which has sent prices to their lowest in over five and a half years. BHP Billiton, the biggest overseas investor in US shale, said it would reduce the number of its US onshore rigs by June in response to lower prices. Tullow, BP and BG Group advanced.
Despite more difficult trading conditions in China and North America, SABMiller's shares rose after the drinks group registered a 4% increase in group net producer revenue in the third quarter.
However, Sports Direct was a heavy faller after the news that founder Mike Ashley had sold £117-worth of shares in the sports retailer equal to a 2.6% stake.
Takeover target Afren also dropped on after the news that it has been reviewing its "capital structure, liquidity and funding requirements" and looking at its cost base and spending plans for 2015 given the recent rapid plunge in oil prices. Afren on Monday extended a 'put up or shut up' deadline for potential bidder Seplat to make an offer until 30 January.
Market Movers
techMARK 3,063.09 +1.08%
FTSE 100 6,728.04 +1.63%
FTSE 250 16,253.31 +0.79% |
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| | FTSE 100 - Risers
Pearson (PSON) 1,296.00p +4.85%
BG Group (BG.) 885.90p +4.31%
Tullow Oil (TLW) 384.50p +3.92%
Aberdeen Asset Management (ADN) 427.80p +3.78%
Vodafone Group (VOD) 238.15p +3.54%
BP (BP.) 426.00p +3.35%
Barratt Developments (BDEV) 440.30p +3.04%
ARM Holdings (ARM) 1,059.00p +3.02%
SABMiller (SAB) 3,442.00p +2.96%
Sainsbury (J) (SBRY) 264.00p +2.84%
FTSE 100 - Fallers
Sports Direct International (SPD) 716.50p -5.79%
Intertek Group (ITRK) 2,297.00p -3.69%
Associated British Foods (ABF) 2,998.00p -1.70%
Babcock International Group (BAB) 1,016.00p -1.17%
Randgold Resources Ltd. (RRS) 5,525.00p -0.63%
Experian (EXPN) 1,162.00p -0.60%
Dixons Carphone (DC.) 439.80p -0.54%
easyJet (EZJ) 1,647.00p -0.42%
Severn Trent (SVT) 2,135.00p -0.14%
Royal Bank of Scotland Group (RBS) 380.20p -0.08%
FTSE 250 - Risers
FirstGroup (FGP) 109.10p +6.96%
Man Group (EMG) 172.10p +6.56%
Nostrum Oil & Gas (NOG) 505.00p +6.05%
Allied Minds (ALM) 420.00p +4.71%
Premier Oil (PMO) 149.10p +4.63%
Pets at Home Group (PETS) 210.00p +3.50%
Ophir Energy (OPHR) 129.70p +3.18%
Jardine Lloyd Thompson Group (JLT) 951.00p +3.15%
Amec Foster Wheeler (AMFW) 814.50p +3.04%
Brown (N.) Group (BWNG) 423.10p +2.94%
FTSE 250 - Fallers
Afren (AFR) 21.00p -18.57%
Poundland Group (PLND) 350.00p -3.63%
JD Sports Fashion (JD.) 488.00p -3.37%
Domino's Pizza Group (DOM) 676.50p -3.15%
UDG Healthcare Public Limited Company (UDG) 390.00p -2.89%
Wetherspoon (J.D.) (JDW) 801.00p -2.20%
Grainger (GRI) 189.00p -2.07%
Enterprise Inns (ETI) 110.00p -1.70%
COLT Group SA (COLT) 130.00p -1.59% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks rise on reports ECB will introduce QE of 50bn euros a month European stocks gained following reports the European Central Bank (ECB) will propose quantitative easing of €50bn a month through 2016. The ECB is expected to announce a 12-month bond purchase programme when it meets on Thursday amid calls to revive the weak economy.
According to sources cited by the Wall Street Journal, the ECB's executive met on Tuesday to outline the proposal.
"Apparent confirmation of the theory that QE is coming was enough to cause markets to rally, although a denial from the institution itself was enough to stymie any further move higher," IG analyst Chris Beauchamp said.
"The risk of such moves is that they increase the chance of disappointment when Mario Draghi actually appears in front of journalists tomorrow."
The euro rose 0.32% to $1.15787 at close of trade on Wednesday.
BoE unanimous in policy decision
Minutes from the Bank of England's (BoE) 8 January meeting showed policymakers were unanimous in their decision to maintain the benchmark interest rate at 0.5% and the size of its asset purchase programme at £375bn, as expected by the market.
The Bank cited low inflation, dragged down by falling oil prices, as part of the reason to keep policy unchanged.
Along with the BoE's minutes, the Office for National Statistics revealed that the UK unemployment rate fell to 5.8% in the three months to November from 6% the previous period, ahead of the 5.9% forecast.
The number of people in employment during the period has increased by 37,000 to reach 30.80m people. However, it missed market expectations for a 74,000 gain.
The number of people applying for jobless claims fell by 58,000 to reach 1.91m in December, exceeding estimates for it to have dropped by 25,000.
Weekly earnings rose 1.8% in the three months to November, falling short of market consensus for a 1.9% increase but surpassing the prior quarter's 1.6% growth.
In the US, housing starts rose 4.4% to 1.09m in December, beating forecasts for a 1.2% increase or 1.04m units, the Commerce Department revealed.
Alstom, SABMiller
SABMiller rallied as an increase in revenue from Africa and Europe helped offset an unexpected fall in third-quarter beer volume from China weakness.
Alstom SA climbed after the French company posted an 11% increase in third-quarter revenue and reiterated its forecasts for sales growth and operating margin.
Dutch chipmaker ASML Holding NV advanced after forecasting first-quarter sales that topped analysts' estimates. |
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| | US Market Report | | US open: Stocks open lower as investors focus on ECB meeting US stocks opened lower on Wednesday, as investors remained focused on Thursday's European Central Bank (ECB) meeting while response to a positive housing report was subdued. Just after 09:30 in New York, the Dow Jones Industrial Average was down 63.80 points, while the S&P 500 dropped 0.15% and the Nasdaq was down 11.51 points.
Investors expect the ECB to outline plane for a programme of quantitative easing when it meets on Thursday, though Ewald Nowotny warned people "should not get overexcited" about the possible outcomes.
"A mixed bag of earnings and uncertainty over future monetary policy in Europe is keeping volatility in US markets supressed this week with the S&P 500 capped at around 2,030 and 17,540 an issue for the Dow Jones Industrial Average," said CMC Markets analyst Jasper Lawler.
"As much as the US banking sector might have underperformed, there is still time for an improvement and today's US Bancorp, American Express and eBay results will be first up to improve sentiment."
Meanwhile, a better-than-expected report on housing starts showed construction started on new US homes increased by 4.4% last month, drove forward by single-family homes.
In corporate news, Netflix rose almost 20% after announcing late on Tuesday its fourth quarter result beat analysts' expectations and giving an upbeat look for 2015.
United Health Group gained almost 2% after a bigger-than-expected rise in quarterly profit, while Microsoft, which will unveil its next version of Windows later on Wednesday, retreated.
IBM fell over 3% after reporting declines in fourth quarter profit and revenue late on Tuesday, while BHP Billiton shed 1% after reporting up to $250m in write-down on its petroleum business.
Gold futures maintained Tuesday's momentum and advanced by a further 0.7% to 1,303.20, while the dollar lost over 1% against the yen as Japanese stocks fell. The greenback fell almost 0.8% against the euro, but registered marginal gains against the pound. |
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| | Broker Tips | | Broker tips: Dixons Carphone, JD Wetherspoon, IG Group Investec has lifted its target for Dixons Carphone from 465p to 500p and retained its 'buy' recommendation for investors, saying that the update on Wednesday reflected a "Christmas cracker" for the electrical retailer.
"Management has indicated expectations for [the year ending April 2015] to be above consensus and moving into 2016 we see scope for the upgrade cycle to continue," Investec said.
A slowdown in like-for-like sales growth at pub group JD Wetherspoon has prompted Numis Securities to cut its rating on the stock from 'add' to 'hold' and lower its forecasts, with the broker cautioning about the company's price position.
Margins fell in the first half as the company continues to undercut the wider pub sector on the price of beer. Investec said: "Based on CGA data, we estimate that JDW's beer price discount to the sector has grown over the last three years, from 14.5% to 17.6%, which is unnecessarily large, in our view."
UBS said that the risk-reward balance when investing in IG Group is now more even due to its high valuation and limited operating leverage, as it cut its stance on the stock from 'buy' to 'neutral'. | | |
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