By This Is Money Reporters
17:30 (CLOSE): Traders cheered more positive signs on the recovery as weaker energy stocks failed to derail buoyant blue-chip shares.
The latest optimism came from the World Bank as it said the global economy was now at a turning point, with growth expected to firm from 2.4 per cent in 2013 to 3.2 per cent this year and 3.4 per cent in 2015.
With America’s Dow Jones Industrial Average recovering from losses at the start of the week to finish higher in Tuesday’s session, the FTSE 100 Index continued its run of form to close 53 points up at 6819.9.
Surge: There was good news for the Dow Jones today.
The Dow Jones was racing ahead by the time of the close in London, up by 100 points on well-received financial results from Bank of America as well as better than expected manufacturing data.
Meanwhile, Germany’s Dax reached new all-time highs as it climbed 2 per cent while France’s Cac 40 leapt 1 per cent on the mood of global optimism.
The better picture from America saw the greenback make gains against sterling, which dropped a cent to 1.64 US dollars. The pound was flat against the single currency at 1.20 euros.
In London, luxury goods retailer Burberry was one of the biggest risers in the top flight after third quarter retail revenues jumped 14 per cent to 528million in the three months to December 31.
Like-for-like growth was in line with expectations at 12 per cent and reflected more strong demand in China. Burberry rose 68p at 1537p, a gain of nearly 5 per cent.
Other strong performances were seen in the insurance sector after Edinburgh-based Standard Life rose 8.8p to 385.9p on the back of a broker upgrade from Credit Suisse. Prudential added 27p to 1377p.
Energy suppliers SSE and Centrica were among the heaviest fallers after Barclays warned of an ‘inevitable’ margin squeeze as political pressure was likely to limit the consumer price hikes needed to offset declining consumption and other cost pressures.
SSE, which owns Southern Electric, fell by 29p to 1320p and British Gas firm Centrica slid 11.5p to 315.5p.
Financial services firm Hargreaves Lansdown was 4 per cent lower after it announced a shake-up of charges for its investor clients.
It estimates overall charges will be cut by 8million over the first year, at a cost to the group’s revenues. But it cautioned there may be a further 9million hit after April 2016.
The group said it would need to bring in around 3.5billion of new business over the next three years to offset the cost of the changes – adding that benefits of previous price cuts had outweighed the impact.
Shares still fell 62p to 1446p as analysts at Canaccord Genuity cut their full-year profits forecast for the 2014/15 year by 3 per cent.
In corporate news, Taylor Wimpey shares were down 2p to 117.8p after Panmure Gordon stockbrokers expressed slight disappointment at the housebuilder’s recent trading in comparison to rivals despite sale completions up 7 per cent last year.
The biggest FTSE 100 risers were Anglo American, up 70p to 1332.5p, Burberry up 68p to 1537p, GKN up 12.4p to 403.6p and G4S up 7.9p to 258p.
The biggest FTSE 100 fallers were Hargreaves Lansdown, down 62p to 1446p, Centrica down 11.5p to 315.5p, Imperial Tobacco down 68p to 2185p and SSE down 29p to 1320p.
15.45: The Footsie extended its gains in late afternoon trade, drawing further support from an opening advance on Wall Street after further positive US economic data.
As it entered the final hour of trading, the FTSE 100 index was ahead 50.8 points at 6,817.6, close to fresh two and half month highs earlier.
In New York, the Dow Jones Industrial Average was up 92.6 points at 16,466.4, extending the previous session’s rally which came after above-forecast December retail sales numbers.
Playing Footsie: The UK blue chip index extended its gains in late afternoon trade, drawing further support from an opening advance on Wall Street
Today’s data saw US producer prices record their largest increase in six months in December as the cost of gasoline rebounded strongly, but inflation pressures remained benign further bAs it entered the final hour of trading, the FTSE 100 index was ahead 47.3 points at 6,814.2.acking up last month;s move by the Federal Reserve to start tapering its economic stimulus measures.
The Labor Department said on Wednesday its seasonally adjusted producer price index rose 0.4 per cent last month, the biggest rise since June, after slipping 0.1 per cent in November.
And a separate report showed manufacturing activity in New York state jumped to its highest level in 20 months in January as new orders soared.
The New York Federal Reserve’s ‘Empire State’ business conditions index rose to 12.51 in January from a revised 2.22 in December, hit its highest level since May 2012.
Meanwhile, a move by the World Bank to upgrade its forecast for global growth this year to 3.2 per cent, and predict a faster pace for both 2015 and 2016 also gave stocks a boost today.
US corporate news was also a positive, with Bank of America seeing its quarterly profit jump by nearly $ 3 billion, as revenue increased and mortgage losses plunged in the clearest sign yet the bank was shaking off the impact of the financial crisis.
UK banks took heart from the good news for the sector across the Atlantic, with Barclays adding 5.4p at 297.1p, Lloyds Banking Group ahead 1.1p at 86.5p, and global giant HSBC up 8.1p at 681.0p.
On the second line, Laura Ashley popped 0.5p higher to 25.0p after the woman’s clothing and home furnishings retailer raised nearly 8million by selling its entire 9.6 per cent stake at 84 pence a share in Moss Bros, a day after the mens outfitters reported buoyant festive sales.
Laura Ashley is believed to have paid around 45p for the bulk of its stake in Moss Bros which it has built up since 2008, so the firm nearly doubled its initial investment.
The company said the disposal proceeds will be used to boost Laura Ashley’s financial position and for additional working capital.
In spite of the stake sale, Moss Bros shares were up another 4.5p to 95.0p having leapt yesterday following its trading update.
But lower after a stake sale, shares in CSR fell 17p to 678 after South Korea’s Samsung sold its entire stake in the British chip maker.
The 9.925 million shares were understood to have been sold by Citigroup via a share placing at 660p each, or 65.5million on total, netting Samsung a 42.5million profit on its investment.
The Korean company acquired a 4.9 per cent stake in CSR at 223p a share in July 2012, as part of a deal to buy the company’s mobile phone handset division for 198million.
Also among the fallers, sub-prime lender Provident Financial shed 5.0p at 1,706p after it said customer numbers in its hard-hit consumer credit division fell 17.3 per cent in 2013, while receivables fell around 15 per cent as it continues to suffer amid low consumer confidence and weak demand for credit.
But newspaper and magazine wholesaler Smiths News added 2.0p at 229.0p as it said its revenues fell by 0.4 per cent year-on-year in the 19 weeks to January 11 following a mixed performance across its divisions, but added that it remains on track for ‘strong’ full-year profits growth.
12.55: London’s leading shares were at their highest levels in two-and-a-half months at lunchtime, finding good gains thanks to support from an upward revision to global growth forecasts by the World Bank.
The FTSE 100 index was up 29.5 points at 6,796.4 as investors cheered the more positive signs on the economic recovery.
But investment group Hargreaves Lansdown bucked the positive blue chip trend, however, chalking up the biggest falls in London after it said new, lower management charges on some of its funds meant it needed ‘to gather an additional 3.5billion of new assets in total over the next three years’.
FTSE fine: The UK blue chip index pushed up to its best levels for 2-1/2 months today
As part of the retail distribution review, fund managers will be banned from paying commissions to distribution platforms aimed at retail investors. The new rules, which come into effect in April, will cost Hargreaves up to 17million in costs and lost revenues.
Peel Hunt analyst Stuart Duncan said, while the impact was relatively modest and much as expected: ‘Although Hargreaves continues to trade well in excess of the rest of the wealth management sector, this reflects the scale of the growth opportunity over the medium to longer term. Valuing this opportunity remains challenging, particularly in light of this morning’s statement. We therefore place our target price under review subject to further consideration.’
And Canaccord Genuity put its rating for Hargreaves Lansdown under review.
‘The impact on revenue will flow through to profit and consequently we expect 2015 pretax profit to be reduced by 3 per cent. 2017 forecasts should be reduced by 5 per cent,’ Canaccord analysts said in a note.
A day after a positive note from Morgan Stanley lifted its shares, Hargreaves Lansdown lost 36.0p to 1,461p.
Energy suppliers SSE and Centrica were also big blue chip fallers after Barclays Capital warned of an ‘inevitable’ margin squeeze because political pressure was likely to limit the consumer price hikes needed to offset declining consumption and other cost pressures.
SSE, which owns Southern Electric, fell 45.5p to 1,303.5p and British Gas owner Centrica slid 10.45p to 316.5p, with Barclays cutting its rating for both to underweight.
On the up, however, Burberry was the biggest blue chip riser today, up 82p at 1,551p after the luxury goods group reported a 14 per cent rise in retail sales to 528million in the three months to the end of December.
Analysts had been expecting a figure of around 520million for the third quarter. But the group cautioned that exchange rate movements could have an impact on the rest of the second half.
Mining group Anglo American a strong performer, up 34.0p to 1,316p after UBS raised its rating on the stock to buy from neutral.
‘Anglo has underperformed the other diversified miners by 18 per cent over the last three months, and, in our opinion, the valuation now looks attractive with the dividend yield at 4.1 per cent and price/net present value at 0.64 times. We see the risk/ reward as more compelling,’ UBS analysts said in a note.
And drug maker GlaxoSmithKline was also in demand, up also rose 20.0p to 2,220p after French bank Societe Generale added the company to its ‘premium list’ of favoured stocks.
Away from the blue chips, Moss Bros rose 4p to 94.5p after fellow retailer Laura Ashley sold its entire holding of 9.5 million shares in the menswear business. The move, which generated around 8million, came a day after Moss Bros shares surged on the back of a strong trading update.
09.55: The Footsie held firm in mid morning trade following strong performances from global stock markets after the World Bank said growth is expected to firm from 2.4 per cent in 2013 to 3.2 per cent this year and 3.4 per cent in 2015.
The FTSE 100 index was up 24.5 points at 6,791.4, setting fresh two and a half month highs.
Anita Paluch, trader at Varengold Bank said: ‘We had a little bit of positive news as World Bank revised its growth forecasts for the global economy growth raising the numbers for three consecutive years. The news is so impressive, that even the latest data on German GDP showing the weakest growth since 2009 did not discourage the traders – it’s the potential that lies ahead what counts.’
Luxury lead: Shares in Burberry topped the FTSE 100 leader board after the luxury products firm said third quarter retail revenues jumped 14 per cent to 528million.
Luxury goods retailer Burberry was the biggest blue chip riser in London after it said third quarter retail revenues jumped 14 per cent to 528million in the three months to December 31.
The like-for-like growth figure was 12 per cent, which was in line with the company’s expectations. Burberry’s continued strong performance was well received in the City, with shares up 81.5p at 1,550.5p.
Miner Anglo American also saw strong demand, adding 58.5p at 1,321p after broker UBS raised its recommendation on the firm to buy.
Strong share price performances were also found in the insurance sector after Standard Life rose 6.8p to 383.9p on the back of a broker upgrade from Credit Suisse. Prudential added 24.5p to 1,374.5p.
But broker downgrades weighed on a number of other blue chip stocks. British Gas owner Centrica was the worst off, dropping 9.1p to 317.9p after Barclays Capital cut its rating to underweight.
A similar move to underweight by JPMorgan Cazenove for food giant Unilever sent its shares down 27.0p to 2,386p.
On the second line, Taylor Wimpey shares were down 2.3p at 117.5p after a trading update from the housebuilder failed to impress.
Taylor Wimpey said total sale completions increased by 7 per cent to 11,696 last year. It also told investors that it entered 2014 with an ‘excellent order book’ and a strong set of selling locations.
08.30: The Footsie notched up solid early gains today, carrying over yesterday’s rally in tandem with advances by global markets, encouraged by an upbeat forecast for growth from the World Bank.
In the first half hour of trading, the FTSE 100 index was up 19.2 points at 6,786.1. The UK blue chip index closed 9.71 points higher at 6,766.86 points on Tuesday after reversing earlier losses to consolidate around two-month highs helped by gains in New York.
Forecast-beating US December retail sales data drove US stocks higher, helping offset some of the concern triggered by last week’s mixed US jobs report and some disappointing corporate earnings.
Asian lead: Stock markets pushed higher today encouraged by upbeat growth forecasts from the World Bank
Brightening the mood today, the World Bank raised its forecast for growth for the first time in three years, signalling the world economy is finally pulling out of a long and sluggish recovery that followed the global financial crisis.
The World Bank upgraded its forecast for global growth this year by two tenths to 3.2 per cent, and predicted a faster pace for both 2015 and 2016.
Max Cohen, Financial Sales Trader at Spreadex said: ‘Recovering from the most significant losses seen since September last year, Asian shares traded higher overnight after the World Bank raised its global growth forecast. Policymakers cited continued strength in advanced economies, offsetting the potential negative impact tighter monetary conditions will have for developing markets, as the main factor.
‘Federal Reserve officials Charles Evans and Dennis Lockhart will speak today in the US, where the central bank’s Beige Book business survey is due after yesterday’s retail-sales report beat estimates. The positive data came as a welcome relief following last week’s disappointing payrolls report. Despite the Federal Reserve’s plans to cut stimulus by $ 10billion per month to $ 75billion, robust economic performance has offset most of the potential negativity.
‘Price moves have been wild recently as the market tries to second-guess the speed of tapering by the Federal Reserve, and when it might actually start raising interest rates. Two of the more hawkish Fed officials, Dallas Fed chief Richard Fisher and Charles Plosser at the Philadelphia Fed, reaffirmed their determination to stick with tapering. Investors’ attention will now turn to the more dovish leader of the Chicago Fed, Charles Evans, who is due to speak later today,’ Cohen added.
Stocks to watch include:
EX-DIVIDENDS – The following companies will trade without the attraction of their latest dividend on Wednesday, knocking 3.39 points off the FTSE 100: Ashtead, Imperial Tobacco and Next.
BURBERRY – The luxury brand posted a 14 per cent rise in underlying retail revenue in the Christmas quarter, though it cautioned that at current levels, exchange rates will be a significant headwind in the balance of its second half.
TULLOW OIL – The oil explorer said it had made two new oil discoveries in Kenya, boosting discovered resources there to 600million barrels, and it was working with government to start developing the finds within three years.
STANDARD CHARTERED – Shares in the Asia-focused bank were boosted on Tuesday by talk of possible bid interest from Australia & New Zealand Banking Group, according to the Daily Express market report.
TAYLOR WIMPEY –The housebuilder said it expects its full-year operating margins to hit the upper end of its expectations, helped by government schemes that have stoked demand for its homes.
BHP BILLITON – Pan Pacific Copper, Japan’s biggest smelter, said on Wednesday it would not sign an annual contract for copper processing fees with BHP Billiton for 2014, after failing to strike an agreement on terms. Separately, the miner appointed Tony Cudmore as President of Corporate Affairs.
AVIVA – The insurance group has toughened oversight of trading activities at its fund management arm after discovering breaches of dealing policy between 2006 and 2012, according to a company filing.