LONDON (Alliance News) - UK shares carried on Tuesday where they left off before the Easter break, led to a higher close by oil-related stocks.
The session was the first chance for London and other Europe markets to react to a worse-than-expected US non-farm payrolls report released on Friday that appeared to push back the timing for a rate hike by the US Federal Reserve.
The FTSE 100 closed up 1.9% at 6,961.77, its third straight daily gain, with 97 stocks in the green Tuesday. The FTSE 250 ended up 1.5% at 17,521.48 and the AIM All-Share up 1.0% at 722.35.
In Europe, the CAC 40 in Paris ended up 1.5%, while the DAX 30 in Frankfurt closed up 1.3%.
Employment in the US rose by much less than expected in March, according to a report released by the Labor Department on Friday. The report said non-farm payroll employment rose by 126,000 jobs in March following a downwardly revised increase of 264,000 jobs in February. Economists had expected employment to increase by about 245,000 jobs compared to the addition of 295,000 jobs originally reported for the previous month.
Meanwhile, the Labor Department said the US unemployment rate held at a six-year low of 5.5% in March, unchanged from February and in line with economist estimates. In addition, average hourly earnings rose 0.3% month-on-month in March, slightly higher than the 0.2% consensus and February's growth of 0.1%.
"Estimates for the timing of the first US rate-hike have been pared back after the disappointing non-farm payrolls report over Easter. Loose monetary policy is not enough by itself to drive stock market returns; there needs to demonstrable evidence of its effectiveness through earnings growth in top-flight US companies," said CMC Markets analyst Jasper Lawler.
At the close of London equity markets, Wall Street was trading higher, with the DJIA up 0.4%, the S&P 500 up 0.3% and the Nasdaq Composite up 0.4%.
The market focus on Wednesday will be on the release at 1900 BST of the minutes of the Federal Reserve's most recent monetary policy meeting, as well as the start of the US corporate earnings season, with aluminum producer Alcoa, traditionally the first to report, releasing its 2015 first-quarter results after the market close.
The pound dropped against the dollar Tuesday following mixed Markit purchasing managers' index readings for Europe and the UK. At London equities market close, the pound was trading at USD1.4860.
PMI data showed a better-than-expected expansion in the UK service sector in March. The Markit/Chartered Institute of Procurement & Supply PMI came in at 58.9 in March, up from 56.7 in February and higher than the forecast of 57.0, marking its quickest rate of expansion in seven months.
"While the data support the view that the next move interest rates will be upward, the lack of inflationary pressures suggests the first [Bank of England] hike remains some way off, and probably not this year unless we see some significant upturn in wage growth," said Chris Williamson, chief economist at Markit.
A final reading of eurozone composite PMI came in marginally worse-than-expected in March, but still managed to reach an 11-month high. The PMI figure came in at 54.0, slightly below the 54.1 flash estimate, but higher than 53.3 in February. Services PMI in the region similarly missed the flash estimate, coming in at 54.2, slightly worse than the 54.3 estimate, but higher than February's 53.7.
In London, oil-related stocks boosted both the FTSE 100 and the FTSE 250, with the FTSE 350 Oil equipment services and distribution sector index ending up 4.4%, and the FTSE 350 Oil & Gas producers sector index up 3.8%.
BG Group, up 6.3%, Royal Dutch Shell 'B' up 3.9%, BP up 2.7%, where amongst the best performers in the blue-chip index, while Premier Oil, up 13%, SOCO International, up 8.1%, Hunting, up 7.6%, Ophir Energy, up 6.9% and Cairn Energy, up 6.7%, were amongst the biggest gainers in the mid-cap index.
Brent oil prices rose on Monday and retained those gains on Tuesday, trading at London equity close at USD58.53 a barrel. Meanwhile, West Texas Intermediate also was higher, trading at USD53.13 a barrel.
The FTSE 350 Mining sector index added 3.3%. Rio Tinto, up 4.0%, Glencore, up 3.3%, Antofagasta, up 3.1%, and Anglo American, up 2.7%, amongst the best performers in the FTSE 100.
"If this trend continues throughout the week the UK index could return to the 7,000 level that has receded into the background over the past 10 days," said Spreadex analyst Connor Campbell. The FTSE 100 surpassed 7,000 points in early March but hasn't seen that level since March 25.
In UK corporate news, HSBC Holdings could be facing an additional bill of several hundred million pounds under plans by the Labour party to increase the bank levy, a tax imposed on the balance sheets of British banks, Sky News reported on Tuesday. The bank would face the heaviest incremental tax burden under a Labour government, Sky said, with the party having pledged to raise an additional GBP800 million per year from the levy.
HSBC shares closed up 0.6% on the day.
British broadcaster ITV is understood to be in talks to acquire the television arm of film production company The Weinstein Co in a deal that would be worth up to USD950 million, The Times reported. The deal, if completed, would include an upfront payment of up to USD400 million, the paper said, citing reports in The Hollywood Reporter, with further payments based on future growth to potentially double the total consideration. Shares ended up 0.9%.
FTSE 250-listed ICAP said its electronic broking average daily volume fell by 9% year-on-year in March and by 1% month-on-month. ICAP shares ended up 0.1%.
In the economic calendar Wednesday, German factory orders are due at 0700 BST, while eurozone retail sales are at 100 BST. The Bank of England releases its credit conditions survey at 1030 BST. In the US, EIA crude oil stocks are at 1530 BST.
In the corporate calendar Wednesday, airlines easyJet and International Consolidated Airlines Group both are scheduled to publish March traffic statistics. IAG was one of the three FTSE 100 stocks to lose ground Tuesday, ending down 0.8% after being cut to Neutral from Overweight by JPMorgan.
WS Atkins will provide a trading update Wednesday. Amerisur Resources will release full-year results, while Robert Waters will issue a first quarter interim management statement.
By Daniel Ruiz; danielruiz@alliancenews.com
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