By This Is Money Reporters
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17.30 (CLOSE): London’s FTSE 100 Index outpaced other European markets today after a strong session boosted by property and commodity-based stocks.
The performance reflected relief at a bigger-than-expected rebound in lending figures in China, easing worries fuelled by recent cooler retail sales and manufacturing growth figures for the country.
The FTSE 100 Index finished 72.4 points higher at 6736, a three-week high and in contrast to the flat showing by the Dax in Frankfurt and Cac 40 in Paris. US markets were closed for a public holiday.
Surge: Sterling surged ahead to 1.67 against the dollar and 1.22 against the Euro.
Mining stocks played a big part in London’s impressive rally, with Anglo American up 2 per cent or 32.5p to 1552p and Randgold Resouces 83p higher at 4857p after another upward session for the price of gold.
Shares improved despite disappointment from Japan, where it emerged the economy grew by 0.3 per cent in the final quarter of last year, compared with forecasts for a rise of 0.7 per cent.
Recent slower growth in China and other major Asian markets has taken a toll on Japan’s exports, although wider market fears over the health of emerging markets now appears to be receding.
On currency markets, the pound reached another four-year high against the US dollar of 1.68 early in the session before falling back to stand at just above 1.67. There was a similar performance against the euro at 1.22.
Sterling’s strength has been good for holidaymakers and shoppers but poses a problem for attempts to re-balance growth through a focus on manufacturing and exports.
The prospect of further gains will be tested this week with important economic releases covering unemployment, inflation, retail sales and public borrowing.
Property firm Hammerson, whose portfolio of 20 shopping centres in the UK and France includes the Bullring in Birmingham, led the FTSE 100 risers board after it reported a better-than-expected 2.1% gain in net rental income for 2013.
The company, which said its occupancy rate stood at 97.7 per cent amid improved consumer confidence, also reported a 5.7 per cent rise in its net asset value per share – one of key benchmarks for the industry.
Shares rose 3 per cent or 17p to 560.5p, while rival property firms British Land added 15.5p to 680p and Land Securities gained 20p to 1064p.
Fresh from the appointment of former RBS chief executive Stephen Hester as its new boss, RSA Insurance continued to do well as its shares improved another 2.35p to 98.2p. RBS was 9.2p higher at 351.8p.
On the fallers board, Rolls-Royce slipped another 19p to 1006p as it continued to suffer in the wake of last week’s profits warning.
The biggest FTSE 100 risers were Hammerson up 17p at 560.5p, Royal Bank of Scotland ahead 9.2p at 351.8p, Imperial Tobacco up 57p at 2357p, RSA Insurance ahead 2.35p at 98.2p.
The biggest fallers were Rolls-Royce down 19p at 1006p, Aberdeen Asset Management off 7.4p at 394p, International Airlines Group down 2.2p at 444.2p and Mondi off 5p at 1023p.
15.00: The pound set another four-year high against the US dollar today, cheering holidaymakers and shoppers but posing a problem for attempts to re-balance growth with a focus on manufacturing and exports.
The further gains in the UK currency mirrored a strong rise by UK stocks today, with the FTSE 100 index up 72.1 points at 6,731.5 with an hour and a half of trading to go. However, with US markets closed for the Presidents Day holiday there was little momentum to maintain the gains.
The pound climbed to 1.68 US dollars at one point today, the highest level since late 2009, though it later fell back a little.
Pound up: The UK currency reached a fresh 4-year high versus the US dollar today, and UK stocks notched up strong gains
The rise came as a Rightmove survey showed house sellers’ asking prices had seen their biggest year-on-year jump since 2007.
The property website Rightmove said that asking prices rose to 251,964 in England and Wales, some 6.9 per cent higher than a year ago as confidence among buyers continues to strengthen.
The latest signs of buoyancy in the housing market will have done nothing to dampen City speculation that the Bank of England’s policymakers will want to hike interest rates from their current historic low of 0.5 per cent sooner than previously thought.
Bank of England policymakers have said they are keeping a watchful eye on the property market for signs of overheating that could create an unsustainable bubble.
And Bank of England governor Mark Carney admitted yesterday that the central bank is powerless to stop the soaring prices of prime property in London, but he dismissed fears of a bubble in the wider housing market.
Speaking on the BBC’S Andrew Marr show, Carney said: ‘The top end of London is driven by cash buyers. It’s driven in many cases by foreign buyers. ‘We as the central bank can’t influence that. We change underwriting standards – it doesn’t matter, there’s not a mortgage.’
Last week, the Bank abandoned forward guidance linking rates to unemployment, with the jobless figure close to reaching the 7 per cent threshold which would allow the Monetary Policy Committee to consider a rise.
Carney signalled that rates would still need to stay well below pre-recession averages but did nothing to refute City estimates that they would inch up by 0.25 per cent next spring, and even refused to rule out a hike this year.
Policymakers at Threadneedle Street also upgraded their forecasts for the UK’s economic growth, further bolstering sterling.
However, Mr Carney has made clear his view that the recovery is unbalanced – too reliant on domestic demand and yet to see the improvements needed in business investment and exports.
Sterling’s recent strength has contributed to low inflation as it means imports are relatively cheaper in shops, while it also means UK tourists can get more for their money when travelling abroad.
However, the ongoing struggle to revive the beleaguered manufacturing sector will not be helped by key export markets finding that goods stamped with the Made in Britain label are ever more expensive.
13.50: Property stocks set the pace today for the Footsie after Bullring shopping centre firm Hammerson posted strong full-year figures.
The rally from the real estate sector came as investors expressed relief at a bigger-than-expected rebound in lending figures in China which led to good gains in Asian markets today.
The loans data eased worries about cooler retail sales and manufacturing growth in the top metals consumer and provided a lift to a number of heavyweight mining stocks in the FTSE 100 index, which added 72.0 points at 6,731.5.
Footsie fine: The FTSE 100 index enjoyed strong gains today although other European markets were flat
Among the miners, Anglo American gained 29.25p to 1,548.75p following recent results, while Randgold Resources was 88.5p higher at 4,862.5p helped by an upgrade in rating from Citigroup.
London’s performance, however, was in contrast to the rest of Europe as the Germany’s Dax 30 and France’s CAC 40 both stuck close to their opening marks.
And the improvement in Asian markets came despite disappointment from Japan, where it emerged the economy grew by 0.3 per cent in the final quarter of last year, compared with forecasts for a rise of 0.7 per cent.
Recent slower growth in China and other major Asian markets has taken a toll on Japan’s exports, although wider market fears over the health of emerging markets now appears to be receding.
However, any further impetus for London’s top flight looked unlikely today due to a public holiday in the United States.
On currency markets, the pound reached another four-year high against the US dollar of 1.68 early in today’s session before falling back. Sterling’s strength has been good for holidaymakers and shoppers but poses a problem for attempts to re-balance growth through a focus on manufacturing and exports.
Real estate group Hammerson led the FTSE 100 risers board after it reported a better-than-expected 2.1 per cent rise in net rental income for last year.
Hammerson shares rose 24.5p to 568p, while rival property firms British Land added 12.75p to 677.25p and Land Securities gained 20.5p to 1,064.5p.
RSA Insurance continued to do well as its shares improved another 2.2p to 98.05p on hopes that the recent appointment of former RBS chief executive Stephen Hester as its new boss will lead to a turnaround, with weekend press reports talking of disposals and a share raising to strength the group.
Canaccord Genuity raised its rating for RSA to hold today, although Exane BNP Paribas was more cautious cutting its recommendation to neutral.
Housebuilding shares were also in demand, with Persimmon putting on 24.0p to 1,409.0p and Taylor Wimpey edging 0.4p higher at 121.7p after the latest Rightmove house prices survey showed strong growth.
10.20: The Footsie made healthy progress as the morning session progressed with investors showing their appetite for moving on following the recent emerging markets storm which engulfed bourses at the end of last month.
By midmorning, the FTSE 100 Index was 57.7 points higher at 6,717.1, reflecting good gains overnight by Asian markets, with the Hang Seng index in Hong Kong climbing more than 1 per cent.
The improvement for global markets came despite disappointment from Japan, where it emerged the economy grew by 0.3 per cent in the final quarter of last year, compared with forecasts for a rise of 0.7 per cent.
RSA rally: Troubled insurer RSA, which recently appointed former RBS boss Stephen Hester as its chief executive, topped the blue chips leader board on turnaround hopes
Slower growth in China and other major Asian markets has taken a toll on Japan’s exports, although wider market fears over the health of emerging markets appears to be receding.
Markus Huber, senior sales-trader and senior analyst at Peregrine & Black said: ‘Somewhat disappointing Japanese growth figures have been overshadowed by record new lending in China, dispersing worries for now that the Chinese economy might be slowing much more than expected.
‘Besides the US celebrating President’s day today and US markets being shut there is very little corporate and economic data out in Europe today making a sideways market and light volume the most likely scenario for today.
‘While sentiment remains positive for stocks, today’s lack of data might just prove a welcome ‘excuse’ for traders to take a step back and let markets take a breather. Even with some considering the most recent advance to the upside a bit excessive in the short-term many a more than willing to take advantage of any slight moves to the downside and using them as an opportunity to increase their long-positions.’
In London, fresh from the appointment of former RBS chief executive Stephen Hester as its new boss, RSA Insurance was the top blue chip riser, up 2.9p to 98.8p.
RSA shares climbed after Sky News reported that the company, which is reeling from an accounting scandal at its Irish division, is looking for prospective buyers for one of its Canadian businesses which could help it raise as much as 200million.
RSA has previously said it was considering all options to raise capital that could include the sale of business units.
The Financial Times said at the weekend that RSA’s new boss Hester was sounding out institutional investors to raise as much as 350million in a share placing that would allow it to avoid a rights issue.
Miners also added their strength to the FTSE 100 index after the good lending numbers from top metals consumer China, with Anglo American gaining 19.5p at 1,539.0p also helped by last Friday’s well-received results.
Gold miner Randgold Resources added 106.0p to 4,880.0p as the gold price hit a 3-1/2 month peak, also boosted by a Citi upgrade to ‘neutral’ on valuation grounds.
Shopping centre firm Hammerson was also doing well, up 11.4p at 554.9p after it reported a 2.1 per cent rise in net rental income to 282.8million for last year.
The real estate company, which is benefiting from the economic recovery in the UK, also reported a 5.7 per cent rise in its net asset value per share – the key benchmark for the industry.
It was joined on the blue chip risers board by rivals British Land, up 10.0p at 674.5p, and Land Securities, which climbed 12.0p to 1,056.0p.
Defence contractor BAE Systems was in demand ahead of its annual results due later this week, gaining 5.3p at 437.2p.
But among the minority fallers, engines maker Rolls-Royce slipped 1.1p to 1,023.9p as it continued to suffer in the wake of last week’s profits warning.
08.30: The Footsie was higher in early trade mirroring strong gains overnight in Asia and in New York on Friday although with US markets closed for the President’s Day holiday today interest could drop off as the session progresses and fresh direction is sought.
In opening trade this morning, the FTSE 100 index was up 32.7 points at 6,692.1 having closed 4.20 points higher on Friday.
The UK blue chip index, up nearly 4 per cent from its February lows, has now recouped more than half of what it lost during the recent emerging markets sell-off.
US rise: Strong gains by US stocks on Friday helped the Footsie score a modest early advance today
Jonathan Sudaria, dealer at London Capital Group said: ‘Nothing has materially changed since we had the emerging market sell off apart from the west’s major indices have had a good crack at retracing most of the down move.
‘Following Janet Yellen’s testimonies it appears that she will be strictly following the line on tapering so the threat of capital flight from emerging markets hasn’t been removed.
‘More weak data from the US on Friday has added to the fog surrounding their economy and overnight Japan posted some poor GDP data, but sentiment for the global economy doesn’t seem to have been impacted.’
UK unemployment, inflation and retail sales numbers will be released later this week but no domestic economic data is scheduled for release today.
The latest house prices survey, released overnight, showed that asking prices for UK houses have risen by the largest margin seen since 2007, with the average amount wanted by property owners breaking 250,000 this month.
Property website Rightmove says that asking prices rose to 251,964 in England and Wales, some 6.9 per cent higher than a year ago as confidence among buyers continues to strengthen.
It is the higher rate of growth since November 2007 and means sellers are asking for 16,000 more for their home than those who listed a year ago.
The strong house prices report comes after Bank of England governor Mark Carney admitted yesterday that the central bank is powerless to stop the soaring prices of prime property in London, but he dismissed fears of a bubble in the wider housing market.
The governor said the BoE could do more little than ‘watch’ as house prices boom in the capital, fuelled by foreign investors, but played down suggestions that the Government’s Help to Buy scheme is hiking prices across the rest of the UK.
Speaking on the BBC’S Andrew Marr show, Carney said: ‘The top end of London is driven by cash buyers. It’s driven in many cases by foreign buyers.
‘We as the central bank can’t influence that. We change underwriting standards – it doesn’t matter, there’s not a mortgage.
‘I will say that if you look at the UK as a whole everywhere, bar Northern Ireland, we are now seeing house prices beginning to recover,’ the Governor added.
Stocks to Watch today include:
RSA INSURANCE – The British insurer RSA is looking for prospective buyers for the sale of one of its Canadian businesses, which could help the company raise as much as $ 200million, Sky News reported on Sunday.
ROYAL MAIL GROUP – Royal Mail and the Communication Workers Union have started talks on a company charter to enshrine their post-privatisation agreement over working conditions for more than 100,000 workers so that the terms can only be overturned by a vote of the company’s shareholders, the Guardian reported.
LLOYDS BANKING GROUP – Lloyds is in talks with Britain’s Prudential Regulation Authority over ‘ringfencing’ rules in an attempt to save its investment banking functions, the Financial Times reported.
BARCLAYS – Barclays has engaged headhunters to begin a search process to replace Sir David Walker as chairman in the coming months and has already commenced board discussions about the plan.
HAMMERSON – The property company said its full-year net asset value rose 5.7 per cent, and that it has lifted its dividend by 8 per cent.
ESSAR ENERGY – The company said its largest shareholder, Essar Global Fund, has made a possible offer of 70 pence per share for the 22 per cent stake it does not own in the London-listed oil and gas producer.
ROLLS ROYCE – The company faces a showdown with investors over how it accounts for lucrative contracts to service aircraft engines, the Times said. company will now hold a briefing on the issue at July’s Farnborough airshow.
Also, an investigation by Britain’s anti-fraud watchdog into Rolls-Royce’s dealings in Asia extends to contracts signed less than three years ago, the Daily Telegraph newspaper said.
WHITBREAD – The company announced a partnership with Action Hotels to develop the Premier Inn brand across the Middle East.
CAPITA – The outsourcing group has signed a framework contract for the Scottish wide area network.