LONDON (Alliance News) - The rebound in stock prices continued for a second day in London and Europe on Wednesday, with London's blue-chip FTSE 100 index recovering all of its post-referendum losses.
The FTSE 100 closed the day up 3.6%, or 219.67 points, at 6,360.06, pushing the index back into positive territory for 2016 to date, up 1.9%. The index also is now above its 6,338.10 reading at the close last Thursday, before the outcome of the referendum, and is up 9.9% from the low it reached Friday in the immediate aftermath of the UK's vote to leave the European Union.
The FTSE 250 ended Wednesday up 3.2%, or 499.84 points, at 16,002.90, but the mid-cap index remains well below the 17,333.51 level at which it closed on Thursday. The FTSE 250 is said to be more reflective of confidence in the UK than the FTSE 100, as the mid-cap index has a greater number of constituents which operate domestically.
The AIM All-Share closed up 1.3%, or 8.73 points, at 697.56 but also remained well below its Thursday closing level of 726.92 points.
"Today's gains have been much broader based with oil and gas stocks, house builders as well as financials leading the gainers...though travel stocks have remained under pressure over concerns that a weaker pound and the recent terrorist attacks in Turkey could deter UK consumers from going abroad," commented Michael Hewson, chief market analyst at CMC Markets.
The first departures took off from Istanbul's Ataturk international airport Wednesday, as the major international transit hub partially resumed operations following a deadly attack on Tuesday that killed 36 people, with Islamic State as the top suspect.
TUI Group ended the day as the biggest faller in the FTSE 100, down 2.9%, while British Airways-owner International Consolidated Airlines Group fell 2.6%.
Stock indices in mainland Europe ended higher. The CAC 40 in Paris closed the day up 2.6% and the DAX 30 in Frankfurt ended up 1.8%. Both the CAC and the DAX remained well short of their closing levels last Thursday.
The pound also recovered a small fraction of its recent heavy losses against the dollar. At the London equities market close, sterling traded at USD1.3519 compared to USD1.3318 at the same time on Tuesday.
The euro traded at USD1.1111 at the close Wednesday, versus USD1.1048 late Tuesday.
Whilst stocks and the pound rebounded, politicians were busy trying to figure out an exit process for the UK. Britain was excluded from EU summit talks for the first time in more than 40 years as the bloc's other 27 members discussed how to react to London's decision to exit the EU.
"The outcome of the [British] referendum creates a new situation for the EU," leaders said in a statement. "We are determined to remain united and...stand ready to tackle any difficulty that may arise from the current situation."
UK Prime Minister David Cameron bid farewell to his EU peers on Tuesday, after a meeting he described as dominated by "sadness and regret".
On Wall Street at the London close, the Dow Jones Industrial Average was up 1.2%, the S&P 500 up 1.4% and the Nasdaq Composite 1.5%.
Providing a much needed distraction from Brexit was US personal consumption expenditure data. The Commerce Department said its personal consumption expenditures price index inched up by 0.2% in May from the month before after rising by 0.3% in April.
The annual rate of growth by the PCE price index slowed to 0.9% in May from 1.1% in April.
Core PCE prices, which exclude food and energy prices, increased by 0.2% month-on-month for the second straight month and the annual rate of growth remained at 1.6% for the third consecutive month. The annual core PCE index is closely watched by the market as it is the preferred measure for inflation by the US Federal Reserve.
Oil prices leapt higher after the Energy Information Administration said US commercial crude oil inventories decreased by 4.1 million barrels last week from the previous week. This was a bigger than the 2.4 million barrel drop expected by economists.
US benchmark West Texas Intermediate jumped from USD48.50 a barrel to trade at USD49.23 at the London stock market close. North Sea benchmark Brent oil traded at USD49.96 a barrel at the London close, higher than the USD47.81 seen at the close Tuesday.
Gold prices nudged higher amid the Brexit uncertainty to USD1,323.55 an ounce at the London equtiies close versus USD1,313.83 at the same time on Tuesday.
In UK corporate news, Dixons Carphone shares ended the day down 1.9%, and one of only four fallers in the FTSE 100.
The mobile phones and electronics retailer expressed confidence in the future of the business following last week's European Union referendum result, saying it believes it will remain "the leader" in the UK market.
The company said that despite the volatility it expects to see following the UK's decision to leave the EU, it expects to find opportunities for additional growth and "further consolidate our position as the leader in the UK market".
Investec analyst Alistair Davies sided with the retailer, saying that whilst there may be some near-term uncertainty surrounding UK consumer confidence, he believes Dixons Carphone's business fundamentals remain strong and the 20% sell-off in shares post the Brexit vote was overdone.
Cobham said it has poached its new chief financial officer from fellow FTSE 250 defence technology company QinetiQ Group.
Cobham said David Mellors will join as chief financial officer, the same position he currently holds at QinetiQ, no later than January 1, 2017. Prior to taking up his position at QinetiQ, Mellors was deputy CFO at Logica, the UK-based IT and management consultancy.
Cobham shares rose 5.7%, while QinetiQ was one of the worst mid-cap performers down 1.3%.
Industrial maintenance, repair and overhauls products distributor Brammer said sales have slowed significantly and issued a profit warning for the first half, hammering its share price.
The company said sales per working day in May were down 3.0% year-on-year, with a weak performance in the UK and sluggish trading in Europe. This weakness has continued into June and underlying margins for the business have weakened as a result.
Brammer said its adjusted pretax profit for the first half of 2016 is now set to miss expectations, and it will review its trading outlook for the year as a whole, including taking measures to improve profitability and strengthen its balance sheet.
The stock closed down 56% at 62.50 pence, having reached its lowest level since April 2009 at 57.75p.
The economic calendar is busy Thursday, with the main interest being German unemployment at 0855 BST, UK GDP and current account data, both at 0930 BST, the eurozone consumer price index at 1000 BST, the accounts from the last European Central Bank policy meeting at 1230 BST, and a speech by Bank of England Governor Mark Carney at 1600 BST.
Also in the calendar are German retail sales at 0700 BST, Italian inflation at 1000 BST, US initial and continuing jobless claims at 1330 BST, and the Chicago purchasing managers' index at 1445 BST.
In the UK corporate calendar, there are trading statements from oil-related companies Tullow Oil and John Wood Group, infrastructure investor and manager John Laing Group, recruiter Harvey Nash Group and outsourcer Serco Group.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
Copyright 2016 Alliance News Limited. All Rights Reserved.
3 Feb 2017 12:09
