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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 jumps 1.6% after business-friendly Budget, Fed meeting ahead Those expecting little market reaction to the Budget on Wednesday were probably left surprised, with stocks in the energy, financial, housing and consumer staples sectors leading the surge in London following George Osborne's statement. Dovish comments from Bank of England policymakers were also buoying sentiment, as investors awaited an anticipated hawkish outlook from the Federal Reserve after the close.
By the end of the session, the FTSE 100 was up 1.6% at 6,945.20, surging 107.59 points on the day. The Footsie is now back re-testing the record closing high of 6,961.14 reached on 5 March.
"UK shares traded higher on Wednesday after the Bank of England signalled lower rates for longer, backed up by weaker labour market data particularly a slowing in wage growth," said CMC Markets analyst Jasper Lawler.
The UK unemployment rate remained stuck at 5.7% over the three months to January, disappointing analysts looking for a drop to 5.6%. Meanwhile, annual earnings growth slowed to just 1.8% from 2.1% the preceding three months, missing the +2.2% consensus forecast.
Meanwhile, Lawler said stocks were lifted as the Budget was a "bit less austere than the autumn statement which could be generally construed as positive for the business environment".
The Federal Open Market Committee concludes its two-day meeting at 18:00 on Wednesday evening. While no change is expected in the policy stance, forward guidance will be in focus given ongoing speculation that policymakers will drop the term 'patient' when referring to the first rate hike.
Stocks jump after Budget measures
Confirmation by chancellor George Osborne of budgetary measures to lower taxes in the struggling North Sea oil industry gave energy producers and services stocks another big lift on Wednesday, including Tullow Oil, Shell and BP.
Asset managers Hargreaves Lansdown and St James's Place were rising on the back of changes to ISA savings, as Osborne introduced greater flexibility for savers. Plans to launch a new 'Help to Buy ISA' to help first-time buyers were also boosting shares of housebuilders like Taylor Wimpey and Barratt Developments, as well as estate agent Savills.
Meanwhile, shares in pub landlords, brewers and beverage companies all added gains after Osborne decided to cut duty on beer by 1p for the third successive time in his budget. Greene King, JD Wetherspoon and Diageo investors were all toasting the announcement.
In other news, shares in Standard Chartered were surging after analysts at Barclays and Bernstein raised their ratings, highlighting the recent appointment of former JPMorgan banker as its new boss. Barclays lifted their stance on StanChart from 'equal weight' to 'overweight', while Bernstein upgraded by two notches from 'underperform' to 'outperform'.
Mining stocks were generally out of favour, with Fresnillo, Rio Tinto, Antofagasta, Glencore and BHP Billiton all in the red.
Market Movers
techMARK 3,249.51 +1.00%
FTSE 100 6,945.20 +1.57%
FTSE 250 17,363.74 +0.93% |
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| | FTSE 100 - Risers
Standard Chartered (STAN) 1,043.00p +8.08%
St James's Place (STJ) 978.00p +5.16%
CRH (CRH) 1,771.00p +4.98%
Royal Mail (RMG) 448.70p +3.94%
Ashtead Group (AHT) 1,134.00p +3.37%
Babcock International Group (BAB) 982.50p +2.77%
Hargreaves Lansdown (HL.) 1,206.00p +2.73%
Taylor Wimpey (TW.) 153.20p +2.61%
United Utilities Group (UU.) 935.00p +2.58%
Royal Dutch Shell 'A' (RDSA) 2,022.50p +2.41%
FTSE 100 - Fallers
Fresnillo (FRES) 644.00p -2.28%
Rio Tinto (RIO) 2,830.50p -1.50%
Weir Group (WEIR) 1,763.00p -0.96%
Antofagasta (ANTO) 681.50p -0.80%
Burberry Group (BRBY) 1,860.00p -0.53%
Glencore (GLEN) 281.30p -0.37%
BHP Billiton (BLT) 1,458.00p -0.34%
Anglo American (AAL) 1,069.50p -0.19%
Sage Group (SGE) 478.40p -0.06%
SABMiller (SAB) 3,694.00p -0.05%
FTSE 250 - Risers
Soco International (SIA) 147.90p +5.64%
Allied Minds (ALM) 664.00p +4.90%
Savills (SVS) 778.00p +4.85%
Amec Foster Wheeler (AMFW) 931.00p +4.20%
Nostrum Oil & Gas (NOG) 572.50p +4.09%
Spire Healthcare Group (SPI) 366.80p +3.41%
Ted Baker (TED) 2,817.00p +3.38%
Morgan Advanced Materials (MGAM) 343.30p +3.37%
Melrose Industries (MRO) 297.40p +3.26%
RPS Group (RPS) 238.40p +3.20%
FTSE 250 - Fallers
Just Eat (JE.) 347.00p -4.93%
Thomas Cook Group (TCG) 144.10p -4.32%
Bank of Georgia Holdings (BGEO) 1,766.00p -3.97%
Premier Oil (PMO) 135.80p -3.62%
esure Group (ESUR) 220.30p -2.65%
Alent (ALNT) 377.00p -2.43%
Game Digital (GMD) 261.70p -2.20%
Afren (AFR) 3.14p -2.09%
Supergroup (SGP) 873.50p -2.07% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks little changed before FOMC delivers policy European stocks were little changed as investors weighed the UK Budget, UK jobs data and the Bank of England's (BoE) meeting minutes ahead of the Federal Reserve's policy announcement. The minutes of the BoE's 4-5 March meeting showed Monetary Policy Committee (MPC) members voted unanimously to keep interest rates at 0.50% and the asset purchase programme at £375bn.
Policymakers expect Bank Rate to remain below average historical levels for some time to come, warning of the risk that sterling could strengthen and leave inflation below target for longer.
All members of the MPC agreed it was more likely than not that BoE interest rates would rise over the next three years.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "We maintain our view that an interest rate hike from 0.50% to 0.75% is most likely in February 2016 - but we still would not be at all surprised if the Bank of England acted just before the end of 2015.
The UK's Office for National Statistics also released labour market data that showed the unemployment rate remained unchanged at 5.7% in the three months to January, compared to forecasts for a drop to 5.6%.
UK employers added 143,000 jobs during the quarter, better than the 130,000 predicted by analysts. Weekly earnings grew 1.6% across the period, slowing from the previous month's' 1.7% increase and missing projections for a 1.8% gain.
Jobless claims fell 31,000 in February, more than the 30,000 forecast.
"Unless wages and business investment start rising, the recovery is looking worryingly fragile with its dependence on consumers and susceptibility to spending being hit by any rise in inflation," warned Chris Williamson, chief economist at Markit.
In the euro-area, a report showed construction output increased 3% in January after a 2.7% fall a month earlier.
The Eurozone trade balance narrowed to €7.9bn in January from €24.3bn the prior month, trailing estimates of €15bn, as exports came in flat and imports declined.
The euro rose 0.53% to $1.0653.
Oil and gas, beverage stocks gain on UK Budget tax cuts
Chancellor George Osborne's 2015 UK Budget revealed tax cuts for the North Sea oil and gas sector, a reduction in alcohol duty and an increase in the bank levy.
In an effort to stimulate investment in the North Sea oil and gas amid a slump in crude, tax cuts worth £1.3bn will be introduced, along with a generous tax allowance to stimulate investment. Brent crude rose 1.5% to $54.37 following the release, ICE data showed.
Shares in UK listed pub landlords, brewers and beverage advanced as Budget included a cut duty on beer by 1p for the third successive time. JD Wetherspoon, Greene King, SABMiller and Diageo were all lifted by the news.
The Budget will also include a 0.21% rise in the rate of the bank levy, raising £900m.
Capital Economics chief UK economist Vicky Redwood said: "Chancellor George Osborne has stuck to his word and delivered a fully-funded budget despite the fact that an election is just around the corner. Clearly he decided that it would play better with the electorate to emphasise his fiscal prudence rather than resort to some blatant pre-election bribery." But she warned that it would take four years of "deep spending cuts" and "very low" interest rates throughout most of the next parliament in order to reach the chancellor's intended budget surplus by 2019.
Interest rates in focus as Fed delivers policy
The Federal Reserve is expected to drop the term 'patient' from its message on interest rates as it delivers its latest policy decision at 18:00 GMT. The central bank is projected to hold back on any increase in rates but the market will be looking for clues on the timing of the first hike when Fed Chair Janet Yellen speaks at a press conference at 18:30 GMT.
Philip Marey, senior US strategist at Rabobank, said given the recent better-than-expected labour market data, the FOMC is likely to open the door to a June rate hike. "In fact, the Fed seems intent on preparing the markets for the first rate hike," he said.
Large and Holcim higher on deal talks
Lafarge SA and Holcim jumped on reports they are in talks to name Bruno Lafont as co-chairman of their combined company to rescue a $40bn merger.
National Bank of Greece SA and Alpha Bank AE dropped to lead Greece's ASE Index lower amid concerns about the country's finances.
RWE edged higher following reports the German utility is looking to sell a 10% stake to Abu Dhabi investors.
Renault SA and Bayerische Motoren Werke AG slumped as an index of European automakers declined for a second day, following a record rise on Monday.
Standard Chartered advanced after Barclays upgraded the shares to 'overweight', citing the positives of a new chief executive officer.
Inditex SA rallied as the clothing retailer posted annual profit in line with analysts' estimates and said sales rose 13% at the start of the first quarter.
SBM Offshore NV gained after agreeing to collaborate with Brazilian authorities investigating companies for corrupt contracts with state-run Petroleo Brasileiro SA. |
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| | US Market Report | | US open: Dow down 70 points as investors await Fed's rate decision US stocks declined early on Wednesday as investors braced themselves for the statement from the Federal Open Market Committee, which could pave to way for a first hike in interest rates in almost 10 years. Just after 10:00 in New York, the Dow Jones Industrial Average was down 77 points, while the S&P 500 and the Nasdaq lost seven and 15 points respectively.
At 18:00 GMT investors will find out whether the Fed has decided to remove the word "patient" from its current policy statement, with speculation that such a move could lead to the US central bank lifting interest rates as early as June.
"The Fed has stressed repeatedly that the first hike will be data dependent and I expect if it does remove its pledge to be patient, it will stress this even more so in order to avoid any market panic," said OANDA's senior market analyst Craig Erlam.
However, Erlam warned that the Fed could spark a negative surprise among investors.
"The biggest risk to the markets today comes from 'patient' remaining in the statement as it may signal a change of course from the Fed," he said, citing disappointing retail sales and the decline in oil prices as factors weighing on inflation.
Elsewhere, data on Wednesday showed mortgage applications fell 3.9% last week, making it the fourth drop in five. Applications for new loans to buy homes fell 2% however an indicator of home-owners appetite to refinance existing mortgages had a deeper decline of 5%.
In company news, FedEx fell almost 2% after revenue missed estimates, even though earnings topped analysts' expectations with third-quarter net profit of $580m, up 53% from $378m a year earlier.
Kraft Foods Group lost 1.8% after recalling 242,000 cases of Macaroni & Cheese Dinner boxes, saying specific products could contain small metal pieces.
Alibaba Group Holding declined up to 1% as the company's stock-sale lockup ends on Wednesday, while Oracle rose over 4% after lifting its dividend.
Sports clothing group Quiksilver jumped 16% after reporting a smaller-than-expected loss on Tuesday.
Oil prices continued to tumble after the American Petroleum Institute said late on Tuesday night that crude supplies rose much more than expected.
West Texas Intermediate losing 2.96% to $42.21 a barrel, while Brent crude shed 1.28% to $52.83 a barrel. |
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| | Broker Tips | | Broker tips: Standard Chartered, HSBC, RSA Insurance Shares in Standard Chartered were surging on Wednesday after analyst at both Barclays and Bernstein raised their rating on the banking stock. Barclays analysts, which lifted their stance on StanChart from 'equal weight' to 'overweight', said they expect the recent appointment of Bill Winters as chief executive officer (CEO) to "mark a turning point [...] and see plenty of scope for the business to be refocused with a material improvement in returns back towards those of Asian peers". Bernstein similarly welcomed the appointment of former JPMorgan banker Winters as a "positive catalyst" as it upgraded StanChart by two notches from 'underperform' to 'outperform'.
Barclays said it sees "another three years of hard labour" at HSBC as it lowered its recommendation on the shares from 'overweight' to 'equal weight'.
"A combination of higher capital requirements, macro headwinds and the need for further significant restructuring lead us to downgrade our earnings expectations 12-16% and to cut our rating [...] with a reduced price target of 575p (from 685p)," Barclays said.
The possible disposal of RSA's Latin America operation "could be a game changer" for the insurance group and could fetch a higher price than the £500m rumoured, according to Berenberg. | | |
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