17.15 (close): Plans unveiled by Barclays for the scaling back of its troublesome investment banking arm provided a shot in the arm for the group’s shares today.
Barclays will cut a further 7,000 jobs in the division and create a bad bank arm with £115billion of non-core assets, including European retail banking.
With chief executive Antony Jenkins calling the moves a ‘bold simplification’ of the business, shares rose nearly eight per cent, or 19.2p at 262.5p, to leave Barclays at the top of the FTSE 100 risers board.
Hopes raised: Stock markets advanced after ECB boss Mari Draghi said the central bank is ready to take action next month to boost the flagging euro zone economy.
The top flight was 42.8 points higher at 6839.3 after global markets were cheered by Federal Reserve chair Janet Yellen’s vow that low interest rates will continue until the US job market is healthy.
It is a view shared by the Bank of England in the UK as policymakers voted to keep interest rates at 0.5 per cent for another month despite recent encouraging signs for the UK economy.
Expectations that the Bank will raise rates early next year meant sterling continued to hover beneath 1.70 against the US dollar, while the pound rose to an 11-week high against the euro at 1.22 after the European Central Bank president Mario Draghi said he was ready to increase stimulus next month in a bid to boost the recovery of the European economy.
Barclays was joined at the top of the FTSE 100 risers board by BT Group after the telecoms giant announced a six per cent rise in annual profits to £2.8billion and said it will hike its full-year dividend by 15 per cent.
Shares rose 10.8p to 387.6p as revenues from its consumer arm, which includes the home telephone business as well as broadband packages with free access to BT’s sports channels, rose for the first time in a decade.
Supermarket Morrisons also made a surprise appearance on the risers board, despite more poor trading figures, with like-for-like sales down by 7.1 per cent in the 13 weeks to May 4, compared with a 4.5 per cent drop forecast in the City.
Shares fell sharply yesterday and were down by another two per cent at one point today before staging an unexpected revival to stand 8.1p higher at 198.9p.
Pharmaceuticals giant AstraZeneca was also stronger amid speculation that US rival Pfizer is planning to return with a takeover proposal worth as much as £53 a share, valuing the business at around £67 billion.
Astra shares were 82p higher at 4713p, having fallen in recent days.
Centrica was almost two per cent or 6.4p lower at 320.4p as it downgraded its profits guidance for this year, partly due to pressures on its British Gas residential supply business following a mild winter and increased competition.
Accounting software firm Sage was the leading faller in the top flight after it announced that Guy Berruyer is to stand down as chief executive after four years in the role. Shares fell 22.5p to 399.5p.
And outside the top flight, shares in Superdry owner SuperGroup slumped 12.5 per cent or 169p to 1179p after it warned that profits will be at the lower end of expectations.
The biggest risers in the FTSE 100 Index were Barclays up 19.2p at 262.5p, Morissons up 8.1p at 198.9p, Arm Holdings up 30p at 901.5p and Tesco up 9p at 295p.
The biggest fallers were Sage down 22.5p at 399.5p, Randgold Resources down 173p at 4530p, Petrofac down 33p at 1388p and Centrica down 6.4p at 320.4p.
15.30: London shares extended their gains in late afternoon trade as US stocks overcame an opening wobble to turn higher helped by dovish comments from European Central Bank (ECB) president Mario Draghi.
With an hour of trading to go, the FTSE 100 index was up 40.6 points at 6,837.1, just below the afternoon peak of 6,840.37.
In early trade on Wall Street, the Dow Jones Industrial Average gained 53.2 points at 16,571.7 having slipped back at open after investors assessed a larger-than-expected drop in weekly jobless claims and awaited further testimony to a Senate committee today by Federal Reserve boss Janet Yellen.
Yellen’s prepared comments to the Congressional Joint Economic Committee yesterday initially created some caution as traders highlighted comments on the housing market, but on further reflection her dovish words helped US stocks rally strongly and ignited gains by global markets today.
But it was ECB boss Draghi who helped continue that rally this afternoon after he said the eurozone’s central bank is ready to take action next month to boost the economy if price inflation forecasts warrant it, while cautioning countries against pressuring the bank into action.
‘The Governing Council is comfortable with acting next time but before we want to see the staff projections that will come out in early June,’ Mario Draghi told a news conference after the ECB again decided to keep its interest rates unchanged at 0.25 per cent today.
Draghi repeated the ECB’s commitment to keeping monetary policy loose for an extended period of time.
Marc Ostwald, strategist at Monument Securities said: ‘On balance one might say that the ECB has effectively painted itself into a corner, from which rhetoric will not provide an escape.’
The ECB boss’s comments pushed the euro a touch lower against the US dollar, although it was still trading at 1.38 having gained more than 14 per cent over the currency since a July 2012 low.
Elsewhere on currency markets, the pound gained slightly against the euro but was flat versus the US dollar after the Bank of England today also kept UK interest rates unchanged.
13.00: The Footsie held near session highs at lunchtime buoyed by some positive corporate news from the likes of Barclays and BT Group and after the Bank of England once again left interest rates unchanged today.
By mid session, the FTSE 100 index 32.3 points higher at 6,828.8, just below the morning peak of 6,836.71 hit after global markets were cheered by Federal Reserve chair Janet Yellen’s vow yesterday that low interest rates will continue until the US job market is healthy.
That view was shared by the Bank of England today as policymakers voted to keep UK interest rates at a record low level of 0.5 per cent for another month despite recent encouraging signs for the UK economy.
Unexpected bounce: Shares in William Morrison rallied after opening falls in spite of poor trading news once again.
Martin Beck, senior economic adviser to the EY ITEM Club said: ‘Today’s decision was unsurprising. GDP growth in Q1 came in below the MPC’s expectations, so, in the words of Mark Carney, the economy remains in ‘recovery rather than expansion’ mode.’
Among the features in London, after earlier falls, supermarket group William Morrison made a surprise appearance on the FTSE 100 risers board, with the stock rallying despite more poor trading figures which showed like-for-like sales down 7.1 per cent in the 13 weeks to May 4, compared with a 4.5 percent drop forecast by the City.
Morrisons’ shares fell sharply yesterday and were down by another 2 per cent at one point today before staging an unexpected revival to stand 5.7p higher at 196.5p.
BT Group gained 11.9p to 388.7p after the telecoms giant revealed that revenues from its consumer arm, which includes the home telephone business as well as broadband packages with free access to BT’s sports channels, rose for the first time in a decade.
BT posted a 6 per cent rise in annual profits to £2.8billion and said it will hike its full-year dividend by 15 per cent.
Barclays was the top blue chip gainer, adding 12.5p at 255.8p in the wake of its plans for the scaling back of its troublesome investment banking arm.
The group said it will cut a further 7,000 jobs in the division and create a bad bank arm with £115billion of non-core assets, including its European retail banking business.
With chief executive Antony Jenkins calling the moves a ‘bold simplification’ of the business, Barclays shares rose more than 5 per cent, or 12.35p higher to 255.6p.
Asia-focused blue chip bank Standard Chartered was also higher despite reporting a drop in first quarter profit, which reflected lower investment bank revenues, weaker Asian currencies and ongoing problems at its South Korean business.
Traders pointed out that the numbers were much as expected and called Standard Chartered’s outlook statement ‘cautiously optimistic’, helping its shares gain almost 3 per cent, or 34.5p at 1,315.0p.
Insurer Prudential moved higher as well, adding 6.5p to 1,383.0p after it reported 29 per cent growth in first quarter new business boosted by sales of bulk annuities, mirroring an update from peer L&G yesterday. L&G shares were up 0.9p at 220.9p today.
Housebuilder Barratt Developments was in demand too, up 4.5p to 380.8p after announcing a 47 per cent rise in forward sales as figures from mortgage lender Halifax today revealed that UK house prices rose 8.5 per cent year-on-year in April as demand from homebuyers remains strong.
That annual increase was slightly down on an 8.7 per cent year-on-year rise in March, while on a month-on-month basis, values dipped 0.2 per cent, marking the second monthly fall in a row and taking average prices to £177,648, Halifax added.
Drugmaker AstraZeneca was also higher today amid speculation that rebuffed US rival Pfizer is planning to return with a takeover proposal worth as much as £53 a share, valuing the business at around £67million.
Astra shares were 71.0p higher at 47,02.0p, having fallen in recent days.
But on the downside, British Gas owner Centrica dropped 9.6p to 317.2p as it downgraded its profits guidance for this year, partly due to pressures on its British Gas residential supply business following a mild winter and increased competition.
British Gas also vowed to freeze its pricing tariffs for the current year.
On the second line, fashion firm SuperGroup saw it shares plunge 15 per cent, or 212.0p to 1,199.0p after it warned that full year profits would be at the lower end of forecasts.
The group behind the Superdry brand revealed a 3.1 per cent fall in fourth quarter like for like sales, blaming the late timing of Easter and a planned reduction in lower margin sales through its eBay outlet.
Freddie George, retail analysts at Cantor Fitzgerald there was ‘no explanation for the decline in volumes other than there is mention of a challenging trading environment.’
‘We suspect that the company has had a disappointing April and there has been weaker momentum in womenswear against difficult comparatives last year,’ He added in a note cutting profit forecasts for SuperGroup but maintaining a buy rating on the stock.
And shares in recently-listed discount stores group Poundland fell 4.0p to 334.7p after its brief trading update failed to inspire.
Poundland said it was confident of making further progress in the current financial year and expected that underlying profits would be in line with market consensus.
09.15: A busy session for corporate updates brought more pain for shareholders in William Morrison and Centrica today but Barclays rallied on the back of additional cost-cutting plans and BT Group results pleased, helping the Footsie post early gains.
After just over an hour of trading, the FTSE 100 index was 30.3 points higher at 6,826.7 after Wall Street gained on the back of Federal Reserve chair Janet Yellen’s vow that low interest rates will continue until the US job market is healthy.
Barclays was the biggest riser in the top flight, up 10.6p to 253.9p, after it said it will cut a further 7,000 jobs in its investment bank division and create a bad bank division with £115billion of non-core assets.
Barclays up: The bank said it is cut a further 7,000 jobs in its investment bank division and create a bad bank division.
It was joined at the top of the FTSE 100 risers board by BT Group after the telecoms giant announced a 6 per cent rise in annual profits to £2.8billion and said it will hike its full year dividend by 15 per cent. BT shares rose 10.1p to 386.9p.
Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers said: ‘Strong fourth quarter numbers added to what had already been an impressive showing from BT, such that there is much scope for appreciation of the full year results.
‘A number of key metrics moved firmly in the right direction, such as earning per share, operating costs and net debt. In addition, BT Sport is ahead of where it was expected to be at this point, allowing for an earlier potential boost to its broadband business, whilst the other operating units continue to benefit from the company’s ongoing investment.’
On the blue chip fallers board, supermarket group Morrisons was 3 per cent lower after it delivered more poor trading figures, with like-for-like sales down by 7.1 per cent in the 13 weeks to May 4, compared with a 4.5 per cent drop forecast in the City.
Morrisons shares fell sharply yesterday following disappointing market share data from Kantar Worldpanel and were down by another 5.2p to 185.6p today.
Rival Tesco – which also saw its market share fall yesterday – fell another 1.5p to 284.6p.
Utility group Centrica was also a casualty, down 2 per cent or 6.5p to 320.3p after it downgraded its profits guidance for this year, partly due to pressures on its British Gas residential supply business following a mild winter and increased competition.
But accounting software Sage Group was the top blue chip faller, shedding over 3 per cent with a 14.2p decline to 407.8p after its chief executive, Guy Berruyer, said he would step down sometime in the next 11 months, by which time the group said it will be on track towards its goal of 6 per cent organic revenue growth for 2015.
08.30: The Footsie pushed higher in early trade this morning after overnight gains from US and Asian stocks buoyed by dovish comments by Federal Reserve chief Janet Yellen and upbeat Chinese trade data that suggested some stabilisation in the key economy.
Global markets were also underpinned by signs of easing tensions in Ukraine after Russian President Vladimir Putin called on pro-Moscow separatists to postpone a secession vote.
In opening deals, the FTSE 100 index was 17.2 points higher at 6,813.7, recovering after closing 2.12 points lower on Wednesday. The index reached a two-month closing high last Friday after five straight days of gains but has since stalled.
Global gains: Advances by stocks in the US and Asia helped give Footsie an early boost this morning.
Jonathan Sudaria, dealer at Capital Spreads said: ‘May has provided traders with very little volatility despite a host of company earnings, economic data and geopolitical tensions – the FTSE has a 70 point range this month. Investors are very comfortable where they are and will presumably be plotting their next attack on new highs. Imagine where the markets might be without the crisis in Ukraine?’
US stock rallied following an early wobble as investors focused on Fed boss Janet Yellen comments in a Congressional testimony which repeated her stance that the economy was still in need of lots of support given the ‘considerable slack’ in the labour market.
Meanwhile Asian markets were also boosted by data sowing China’s exports and imports returned to slight growth in April, beating market forecasts and offering some positive signals for the world’s second-largest economy after a weaker-than-expected start to 2014.
Domestic data released overnight showed rises in British house prices rises slowing, somewhat tempering a surge in property values that has stirred talk of a bubble and raised concern at the Bank of England.
The latest survey by mortgage lender Halifax, unveiled this morning, unexpectedly showed a further 0.2 per cent month-on-month fall in house prices in April after dropping 1.2 per cent in March.
Another survey, by the Royal Institution of Chartered Surveyors released overnight, said 26 per cent of surveyors reported increased agreed sales in the three months to April, with each surveyor having sold an average of 23 properties – the highest figure since February 2008.
But the number of new properties for sale coming into the market fell for the fourth consecutive month – as the market ‘continues to be marred by weak supply and high demand’ RICS said – pushing house prices higher.
The Bank’s governor Mark Carney and the rest of its Monetary Policy Committee look set to keep UK interest rates at a record low when their latest meeting decision is unveiled at midday today despite the worries over house prices and signs that the UK’s economic recovery is picking up more speed.
The European Central Bank is also expected to keep its interest rates unchanged at 12.45 pm today, although markets will keenly await ECB boss Mario Draghi’s later press conference for comments on whether any action might be taken to combat deflationary forces in the Eurozone.
‘Mark Carney and his band of merry men are not expected to do anything so the interest lies with Signor Draghi,’ Capital Spreads’ Sudaria said.
‘Given the improvement in the performance of the Eurozone recently, rates are expected to stay stuck in the mud, but the following press conference usually gets the market examining his poker face. He has surprised us before – don’t assume an eventless session.’
Stocks to watch include:
WILLIAM MORRISON – Britain’s No. 4 grocer posted a worsening fall in quarterly underlying sales, hurt by its move to cut prices to combat a loss of market share to discounters and by its relative lack of exposure to fast growing online and convenience markets.
BARCLAYS – The bank said it will cut 19,000 jobs in the next three years and set up a ‘bad bank’ of assets to run down as it tries to get a turnaround plan back on track by cutting costs and lifting profitability.
STANDARD CHARTERED – The bank said its first-quarter profit fell by a high single-digit percentage compared with last year, thanks to tough market conditions and weakness in Asian currencies including the Indian rupee and Indonesian rupiah.
GLENCORE XSTRATA – The commodities group said it has appointed Tony Hayward, the former BP chief executive as its chairman. Hayward, who is chief executive of Genel Energy, has been serving as interim chairman at Glencore Xstrata since last May.
RIO TINTO – The miner’s business improvement programme is gaining speed, the company’s chief executive Sam Walsh said on Thursday.
BT GROUP – Strong demand for fibre broadband and television helped the telecoms firm report its first growth in consumer revenues in a decade and strong overall full year results. IMI – The engineering company reported a 4 per cent decline in group revenue for the first four months of the year, hurt by the impact of a strong pound.
RANDGOLD RESOURCES – The miner reported a 14 per cent rise in first-quarter profit as it produced more gold during the period.
RSA – The insurer said net written premiums fell in the first quarter of the year as a turnaround plan involving disposals and more disciplined trading took hold.
CENTRICA – The gas distributor reduced its outlook for earnings in 2014, with full year adjusted EPS now expected to be in range of 22-23p, although it said earnings growth is expected in 2015. The group also said it was selling a 40 per cent stake in its Canadian natural gas business to joint venture partner Qatar Petroleum International for around $ 200million.