London close: Stimulus hopes drive FTSE higher

LONDON (ShareCast) – – FTSE closes up 84.50 at 6,604.89
– UK CPI falls to 52-month low
– UK house price gains accelerate
– Kingfisher (LSE: KGF.L – news) leads gains

techMARK 2,773.82 +0.72%
FTSE 100 6,604.89 +1.30%
FTSE 250 16,153.13 +0.83%

It was a strong finish for the City today on the back of upbeat performances by a number of UK stocks, hopes of stimulus, and following a string of economic data releases.

The FTSE 100 bounced back from a seven-week low, closing up 84.50 points at 6,604.89.

IG Group‘s Market Analyst, Chris Beauchamp, commented that yesterday’s low has been “swiftly forgotten”, saying that investors are betting that “China might be about to boost stimulus measures to help counteract a slowing economy”.

He continued: “In western eyes, the Communist Party has unfettered power to maintain China’s growth rates, so miners are rallying today as risk appetite recovers […]

“Also helping European equity markets are comments from Deutsche Bundesbank Chief Jens Weidmann, who appears to be keen to do his bit to shore up the situation by hinting that quantitative easing in Europe is not entirely impossible. To hear a German make this comment is a novelty, given their previous intransigence. Perhaps there is hope for some European Central Bank action after all.

“So, the sum of today’s situation is talk of stimulus in China, and talk of stimulus in the Eurozone. But, no actual stimulus, and if markets think that talk is the only thing likely to happen, today’s rally could easily evaporate.”

UK CPI falls to 52-month low in February

The UK´s consumer price index (CPI (Other OTC: CPICQ – news) ) registered a rise of 0.5% month-on-month (1.7% year-on-year) in February, according to the Office for National Statistics (ONS).

That followed a reading of 1.9% the month before and marked a 52-month low. Nevertheless, it was exactly in line with the consensus estimate.

Barclays Research said: “All in all, measured wage growth, a slower pace of labour market normalisation than previously, combined with downside input price pressures, are likely to provide some further comfort to the MPC (KOSDAQ: 050540.KQ – news) that inflation pressures are not yet building up in the economy despite the recovery gathering speed.

“Such macroeconomic conditions should be consistent with an unchanged loose monetary policy stance in the coming quarters. Our baseline scenario remains that the MPC will hike rates in the second quarter of 2015.”

UK house price gains accelerate to 6.8% pace in January

House prices in the UK accelerated their pace of gains in January, to rise by 6.8% when compared with year-ago levels, their fastest since August of 2010, according to ONS.

That compared with a 5.5% rate of increase in the month before.

Meanwhile, loans for home purchase retreated to 47,550 in February, from 49,341 in the month before, according to the British Bankers’ Association.

The consensus estimate had been for a reading of 50,000.

In other macro news, the Confederation of British Industry’s (CBI) total sales index fell to a reading of 13 per cent in March, after posting 37% in the month before, its distributive trades survey showed.

That was lower than the print of 28% expected by economists. However, sales are expected to bounce back next month. To take note of, Mother’s Day and Easter fall later this year, the business lobby explained.

Kingfishers climbs on cash return plans

Kingfisher, Europe’s largest home improvement retailer, rose strongly after it said it would return 200m pounds to shareholders this year and expand into new markets after profits improved by a tenth in the 12 months ended February 1st. The company, which owns B&Q and Screwfix in the UK, said it would embark on a new multi-year programme of additional capital returns.

Miner Anglo American (LSE: AAL.L – news) was also higher despite halting operations at its Los Bronces copper project in Chile due to violent protests by workers. Investec (LSE: INVP.L – news) said: “Our analyst would expect only a negligible impact on earnings if this dispute with contractors gets resolved reasonably quickly.”

Meanwhile, cruise line operator Carnival (LSE: CCL.L – news) fell after it registered flat earnings per share during the first quarter of its fiscal year. Net (Dusseldorf: NETK.DU – news) revenue yields during the period fell by 2.1% in comparison with 2013, but were ahead of the company´s guidance for a drop of 3-4%.

Royal Mail (Other OTC: ROYMF – news) was one of the other few stocks on the FTSE 100 in the red after saying it is to begin talks with its unions about cutting a net 1,300 back office jobs in order to save £50m per year from 2016 onwards.

On the second tier, online gaming group 888 rose on the back of a strong performance and a highly cash generative year, which prompted the proposal of an extra one-off dividend of 7.0 cents per share on top of a final dividend of 4.0 cents.

Elsewhere, administrators have been appointed at pawn broker Albemarle & Bond (Other OTC: ABMLF – news) – only three years ago a darling of the stock market – after its lenders refused to support its turnaround plan.

FTSE 100 – Risers
Kingfisher (Frankfurt: KFI1.F – news) (KGF) 430.80p +5.98%
SABMiller (Berlin: BRW1.BE – news) (SAB) 2,978.00p +5.04%
Anglo American (AAL) 1,498.00p +4.03%
easyJet (EZJ) 1,692.00p +3.68%
Travis Perkins (LSE: TPK.L – news) (TPK) 1,862.00p +3.33%
Wolseley (Frankfurt: 24W2.F – news) (WOS) 3,412.00p +3.27%
Petrofac Ltd. (PFC) 1,434.00p +3.02%
Rio Tinto (Xetra: 855018 – news) (RIO) 3,283.00p +2.95%
Fresnillo (Berlin: FNL.BE – news) (FRES) 876.00p +2.82%
Ashtead Group (LSE: AHT.L – news) (AHT) 953.50p +2.80%

FTSE 100 – Fallers
Carnival (Berlin: CVC1.BE – news) (CCL) 2,343.00p -4.60%
Royal Mail (RMG (Brussels: ROU.BR – news) ) 565.50p -3.17%
British Sky Broadcasting Group (BSY) 927.50p -1.49%
Morrison (Wm) Supermarkets (MRW) 210.30p -0.90%
Sainsbury (Berlin: SUY1.BE – news) (J) (SBRY) 310.30p -0.03%

FTSE 250 – Risers
Cairn Energy (LSE: CNE.L – news) (CNE) 160.90p +6.34%
888 Holdings (888) 143.20p +6.07%
Partnership Assurance Group (PA.) 124.50p +4.45%
WH Smith (LSE: SMWH.L – news) (SMWH) 1,173.00p +4.27%
Bwin.party Digital Entertainment (BPTY) 127.30p +4.09%
Evraz (LSE: EVR.L – news) (EVR) 67.65p +3.76%
Countrywide (LSE: CWD.L – news) (CWD) 675.00p +3.69%
Greencore Group (LSE: GNC.L – news) (GNC) 265.00p +3.68%
Keller Group (LSE: KLR.L – news) (KLR) 1,057.00p +3.63%
Home Retail Group (Frankfurt: PZR.F – news) (HOME) 218.40p +3.51%

FTSE 250 – Fallers
Centamin (DI (KSE: 003160.KS – news) ) (CEY) 53.00p -8.15%
ITE Group (LSE: ITE.L – news) (ITE) 202.00p -3.40%
Xaar (XAR) 855.50p -2.89%
Worldwide Healthcare Trust (WWH) 1,288.00p -2.79%
Riverstone Energy Limited (RSE) 871.00p -2.68%
Polymetal International (POLY) 595.00p -2.46%
Oxford Instruments (LSE: OXIG.L – news) (OXIG) 1,272.00p -2.30%
Computacenter (CCC) 651.00p -2.25%
Kentz Corporation Ltd (LSE: KENZ.L – news) . (KENZ) 740.00p -1.92%
Foxtons Group (FOXT) 374.00p -1.84%

NR

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