By This Is Money Reporters
15.15: The Footsie held firm in mid-afternoon trade but slipped back from earlier highs as US stocks also saw an early advance eroded as investors sought fresh direction.
With an hour and a quarter of trading to go, the FTSE 100 index was up 15.9 points at 6,620.7, having retreated from a morning high of 6,643.58.
In New York, the Dow Jones Industrial Average was up 41.8 points at 16,409.7, albeit having reached an early high of 16,466 but still extending the previous session’s gains as fresh US data pointed to improving economic conditions.
Shares crushed: Shares in ‘Candy Crush’ game developer King Digital Entertainment fell 10% on their New York debut today
Following on from yesterday’s better than expected US consumer confidence reading, February US durable goods orders rose more than forecast, ending two straight months of declines.
Separately, Markit’s preliminary composite US purchasing managers index showed activity accelerating n March at a faster rate than in February as the services sector perked up.
And James Bullard, president of the Federal Reserve Bank of St. Louis, said today that the outlook for the US economy was ‘quite good.’
Investors were also encouraged by an easing of tensions over Ukraine after US President Barack Obama and his allies agreed to hold off on more damaging economic sanctions unless Moscow goes beyond the seizure of Crimea.
The development seemed to limit the odds that the biggest East-West conflict since the Cold War could escalate further.
Despite the positive start on Wall Street, Facebook saw its shares fall 2.4 per cent after the social media group said late on Tuesday that it would buy Oculus VR, a maker of virtual-reality glasses gaming, for $ 2billion.
The acquisition follows Facebook’s $ 19billion deal to buy messaging business WhatsApp in February.
And shares in ‘Candy Crush’ game developer King Digital Entertainment fell over 10 per cent as they made their debut in New York today following an initial public offering which had valued the firm at about $ 6billion.
The stock, which was the most actively traded on the New York Stock Exchange, fell below $ 20 a share from an IPO price of $ 22.50.
12.55: Increased optimism over the global economy after stronger US data yesterday helped propel global markets higher today, with the Footsie also boosted by a move from SSE to shake-up the energy market.
Growing bets that China will act to stimulate its economy and an increased resilience to uncertainty over relations between Russia and the West over Crimea also helped to support equity market.
At lunchtime, the FTSE 100 Index was up 30.9 points to 6,635.8, holding near its morning peak of 6,643.06.
Energy boost: Energy Secretary Ed Davey called on other firms to consider following SSE’s lead in freezing prices for the next 2 years
Britain’s second biggest energy supplier, SSE today said it will freeze household gas and electricity prices for its 9.2m customers for almost two years.
The move by the Southern Electric and Scottish Hydro owner led Energy Secretary Ed Davey to call for other firms to consider doing the same.
SSE said it was also cutting 500 jobs as part of a cost-cutting programme and announced plans for a legal separation of its wholesale business – which includes energy storage and production – from its retail division which sells energy to homes and businesses.
SSE shares rose 16p to 1,514p as the likely 100 million cost of its pledge to freeze prices was offset by plans for more operational efficiencies and a vow to simplify its focus onto core assets.
SSE’s supply profit margins could fall from their usual level of around 5 per cent to as low as 2.5 per cent but the impact of a price war on the profitability of Centrica had a much greater impact on the British Gas owner as its shares slid 5p to 327.5p.
The moves by SSE come as the energy sector prepares to face the result of a regulatory probe which is widely expected to result in it being referred for a full-scale two-year competition investigation.
Insurers featured among the blue chips gainers led by Legal & General after news it had won a 3billion bulk annuity contract with the ICI pension fund.
Eamonn Flanagan at Shore Capital said: ‘In our view, this deal, with the remaining pipeline for such deals still strong, should allay any fears in the market over Legals’ ability to deliver cash and growth following the changes to the individual annuity market announced in last week’s budget.’
L&G shares added 7.15p to 216.6p, while Aviva was 12.25p higher at 493.3p.
Smaller annuity specialists Just Retirement and Partnership, which were also hard hit after the budget continued to recover today, adding 8.5p to 145.0p and 9.5p to 134.0p respectively.
But among the fallers, Lloyds Banking Group fell 3.4p to 75.7p, a fall of 4 per cent after the 4.2 billion sale of another tranche of the Government’s holding in the lender.
The sale cut the Government’s ownership of Lloyds to just under 25 per cent from 33 per cent previously.
And ITV fell 0.5p to 194.5p after broker UBS cut its recommendation on the broadcaster to neutral from buy.
‘ITV shares have increased by 272 per cent since the start of 2010, outperforming the FTSE 100 by 250 per cent. We have been positive on ITV through this time, however now feel that the market is pricing in much of the advertising recovery, Studios turnaround, balance sheet restructuring and some benefit from expansion in pay-tv, therefore we view continued outperformance is less likely,’ UBS analysts’ said in a note.
10.15: The Footsie extended its gains as the morning session progressed, supported by strength in global markets following some upbeat US economic data yesterday, with insurers bouncing back.
By midmorning, the FTSE 100 Index was 35.3 points higher at 6,640.2, hovering close to the session peak.
Ishaq Siddiqi, market strategist at ETX Capital said: ‘US consumer confidence data blew the doors off yesterday, reaching a six-year high of 82.3 from 78.3 on the month.
Annuity boost: Shares in Legal & General topped the FTSE 100 leader board after securing a 3billion bulk annuity contract from ICI Pension Fund
‘US macros are thawing; data indicators are showing an improvement and markets have had enough time to digest the likelihood of monetary tightening by the Federal Reserve next year.
‘After all, it’s not unreasonable for the Fed to indicate rate hikes as the central bank reins in stimulus on an improving US economy.
Life insurers featured among the blue chip risers, with Legal & General the top gainer with a 6.6p advance to 216.1p after it unveiled a 3billion-pound bulk annuity contract deal with the ICI Pension Fund.
Despite the bounce today, L&G’s stock is still down roughly 6 per cent since last Wednesday’s Budget, when the Chancellor unveiled plans to scrap a system that made it compulsory for most retirees to buy an annuity.
Peer Standard Life was also in demand, up 20.5p to 394.3p after it confirmed plans to acquire Ignis Asset Management for 390million, increasing the amount of money it manages by one third as it shifts its business to fund management from insurance.
Standard Life expects the deal to boost its earnings and help it cut costs over the next three years. It’s shares have now more than recouped the losses it suffered after the Budget.
And Prudential also found gains as the sector rallied, taking on 17.3p at 1,325.5p in spite of the stock trading without entitlement to its latest dividend payout today.
Overall ex-dividend factors clipped around 3.6 points off the FTSE 100’s gains today, with BSkyB, Schroders and Smiths Group also trading without their payout attractions.
Another stock recently hit following changes announced in the budget also recovered some ground today.
Bookmaker William Hill fell sharply after the Budget increased the tax on fixed odds betting terminals from 20 per cent to 25 per cent, a move the firm estimated would cost it around 22million.
But its stock added 8.9p today at 348.2p after broker HSBC Securities hiked its rating to overweight from underweight.
Among the FTSE 100 fallers, the 4.2billion sale of another tranche of the Government’s holding in Lloyds Banking Group triggered a big fall in the company’s share price today.
The stock slipped back towards the 75.5p sale price secured from institutional investors for 24 per cent of the Treasury’s remaining shares in the bank. Lloyds was down 3.2p to 75.8p, a fall of 4 per cent,
The other major focus of the session was on the energy sector after SSE pledged to freeze household bills until January 2016.
SSE shares rose 22p to 1,520p as the company also outlined plans for more operational efficiencies and pledged to simplify its focus onto core assets.
The update comes as the energy sector prepares to face the result of a regulatory probe which is widely expected to result in it being referred for a full-scale two-year competition investigation.
Shares in British Gas owner Centrica moved in the opposite direction, down 5.3p at 327.2p.
Further down the food chain, shares in floor coverings retailer Carpetright dropped 8 per cent, or 44.5p to 542p after it warned on profits for the third time in six months.
Carpetright said underlying profits for the year to the end of April will be in the range of 3.5million to 5.5million, against 9.7million a year earlier.
08.30: The FTSE 100 has opened up 7.1 points at 6,612 amid increased optimism over the global economy as stronger US data helped allay fears about the pace of recovery there.
London’s top index tracked gains on Asian markets and Wall Street overnight after traders welcomed buoyant US consumer confidence and house prices data.
The two reports were the latest in a series of positive releases from the US, supporting the view that bad weather rather than inherent economic weakness affected weaker updates earlier this year.
Economy watch: Buoyant US consumer confidence and house prices data has supported the view that bad winter weather rather than inherent economic weakness has held back recovery of late
‘Concerns around the three C’s (cold, Crimea, China) are dropping off as the effect of the US winter subsides, the Crimean conflict is no longer affecting markets and China has seen stimulation bets ramping up,’ said Evan Lucas, market strategist at IG.
‘This will mean markets will continue to push higher in the short term, with the US and China currently driving most market reactions.
‘Signs of stability or growth will be equity and commodity supportive.’
Speculation that China will act to stimulate its economy and easing concerns over a breakdown in relations between Russia and the West over Crimea helped to support European markets yesterday.
The FTSE 100 rose 84.50 points or 1.3 per cent to 6,604.89 in the last session after Kingfisher and easyJet posted updates that raised optimism about the outlook for corporate earnings.
Four FTSE 100 stocks, including insurer Prudential, are due to go ex-dividend and lose their payout attractions today, knocking between 3.27 and 3.64 points off the index.
Stocks to watch today include:
LLOYDS BANKING GROUP: The Government sold 4.2billion of shares in Lloyds to cut its stake in the country’s largest retail bank to 25 per cent and put it on course for a complete exit in the next year at a profit.
ASTRAZENECA: The group has raised its bet on Japan’s drug market by buying out the remaining stake held by Sumitomo Chemical in its local unit.
SSE: The utility firm said it would split its wholesale and retail divisions by March 2015, and freeze its household energy prices until at least January 2016.
STANDARD LIFE: The insurer announced the acquisition of Ignis Asset Management from Phoenix Holdings for 390million.
LEGAL & GENERAL: The life insurance and pensions provider said it had won a 3billion bulk annuity contract with the ICI Pension Fund.
TUI TRAVEL: Europe’s biggest tour operator by revenues said bookings for its key summer period were progressing in line with its expectations, giving it confidence it would meet a target for annual profit growth of 7 to 10 per cent.
CARPETRIGHT: The floor coverings retailer has warned on profit for the third time in almost six months, saying sales have slowed and it has yet to see any boost from an improving housing market.
ASIA RESOURCE MINERALS (ARMS): The coal miner formerly called Bumi announced its long-awaited split with the Indonesian family that helped found it, sparking bitter posts on Twitter between a family member and fellow ARMS founder Nat Rothschild.
LADBROKES: The Daily Mail market report cited talk that Irish bookmaker Paddy Power and a British private equity firm are stalking the betting firm, with any offer seen in the 200 pence per share region.
SABMILLER: Shares in the world’s second-largest brewer rose 5 per cent yesterday, and the Daily Express market report put the move down to talk that a takeover by Anheuser-Busch InBev – maker of Budweiser, Stella Artois and Corona – is edging closer.
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