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LONDON MARKET CLOSE: FTSE Rises As Gold Sparkles After Dovish US Fed

Thu, 20th Jun 2019 16:50

(Alliance News) - A trio of cautious central banks helped London stocks climb on Thursday, with the Bank of England the latest to chime in with a downbeat outlook. The BoE's comments came after a dovish US Federal Reserve meeting on Wednesday and the European Central Bank on Tuesday opening the door to further possible stimulus measures. Gold trading around its best levels since 2014 in the wake of the Fed indicating there could be more accommodation to help the US economy boosted Fresnillo in the FTSE 100, while cruise operator Carnival sank 11% after cutting its outlook. The FTSE 100 index closed up 20.90 points, or 0.3%, at 7,424.44. The FTSE 250 ended up 138.67 points, or 0.7%, at 19,384.13, and the AIM All-Share closed up 1.33 points, or 0.1%, at 933.39.The Cboe UK 100 ended up 0.5% at 12,609.70, the Cboe UK 250 closed up 0.6% at 17,353.40, and the Cboe Small Companies ended down 0.4% at 11,612.36.In European equities on Thursday, the CAC 40 in Paris ended up 0.3%, while the DAX 30 in Frankfurt gained 0.4%.The pound had risen above the USD1.27 mark overnight in the wake of the Fed's cautious comments, but a downbeat assessment of the UK economy from the BoE kept sterling's gains in check.The pound was quoted at USD1.2693 at the London equities close Thursday, compared to USD1.2632 at the close on Wednesday.The BoE's nine-strong Monetary Policy Committee voted to keep Bank Rate at 0.75%, while also voting to keep corporate bond purchases at GBP10 billion and keep stock of purchases assets at GBP435 billion. Since the BoE's last meeting in May, data have been broadly in line with assumptions, though downside risks to growth have increased, the MPC said.Internationally, trade tensions have intensified, while at home, the perceived likelihood of a no-deal Brexit has risen.As expected, recent data have been volatile, in "large part" due to "Brexit-related effects" on financial markets and businesses, the central bank said. The BoE now expects UK gross domestic product to be flat in the second quarter on the quarter before, after a Brexit stockpiling-driven 0.5% rise in the first three months of the year."On the whole the message is following the theme set by the bank's peers in recent days by turning more dovish and while Governor Carney and the MPC have stopped short of delivering as strong a signal as the ECB or the Fed, it does seem increasingly likely that the next move will be an interest rate cut rather than a hike," said David Cheetham, chief market analyst at XTB.Elsewhere in the UK, Home Secretary Sajid Javid was eliminated from the race to become the next Conservative party leader after the fourth round of voting.Environment Secretary Michael Gove has overtaken Jeremy Hunt to become the main rival to leadership campaign frontrunner Boris Johnson. The two candidates remaining in the race, who will then go on to a ballot of 160,000 Tory members, will be announced at around 1800 BST.Meanwhile, the euro stood at USD1.1273 at the European equities close Thursday, against USD1.1217 at the same time on Wednesday.Stocks in New York were in the green at the London equities close, with the DJIA up 0.7%, the S&P 500 index up 0.6%, and the Nasdaq Composite also up 0.6%. Brent oil was quoted at USD64.28 a barrel at the London equities close Thursday, sharply higher compared to USD61.98 late Wednesday.The price of oil spiked as tensions between the US and Iran heated up, with the US military calling the downing of one of its drones in international airspace an "unprovoked attack."US Central Command, which overseas forces in the Middle East, confirmed reports that its aircraft was downed by an Iranian surface-to-air missile system.But it rejected Iran's claim that the drone was operating over Iranian airspace. Central Command said in a statement that the drone was over the Strait of Hormuz."This was an unprovoked attack on a US surveillance asset in international airspace," it said.The higher oil price caused stocks such as BP and Royal Dutch Shell to gain, with BP ending up 2.0%, Shell 'A' shares up 1.6% and 'B' shares also up 1.6%. In other commodities, gold also had a good session, quoted at USD1,385.72 an ounce at the London equities close Thursday - trading around its best levels since early 2014 - against USD1,344.50 at the close on Wednesday.This was as the dollar fell after the dovish Fed meeting. The precious metal's boost helped to lift London-listed gold miners, with Fresnillo ending as the best performer in the FTSE 100, up 5.7%. Among mid-cap gold miners, Hochschild Mining and Centamin both closed up 4.5%. Back in the FTSE 100 and cruise operator Carnival ended as the worst performer, down 11% after cutting its outlook.In the first half, which covers the six months to May 31, Carnival recorded net income of USD787 million, 17% lower than USD951 million reported a year before. The company's total revenue in the first half increased 11% to USD9.51 billion from USD8.59 billion.In the first half, Carnival recorded adjusted earnings per share of USD1.15, 5.0% behind the USD1.21 seen the year before.Looking ahead, Carnival said it expects its financial 2019 full-year adjusted earnings per share to be between USD4.25 and USD4.35, which is lower than the previously guided USD4.35 to USD4.55.Russian steelmaker Evraz shed 3.4% after senior company executives and a major investor completed the previously announced 1.7% stake sale in the company.Non-Executive Chair Alexander Abramov, Chief Executive Officer Alexander Frolov, Non-Executive Director Eugene Shvidler and Chelsea football club owner Roman Abramovich have collectively sold 24.9 million shares at 635 pence each, equating to GBP158.1 million in total.BCA Marketplace finished safely as the best performer in the FTSE 250, shooting up 21% to 235.01 pence on news of a takeover approach. BCA, which buys and sells used cars, said it is in advanced talks with TDR Capital regarding a possible 243 pence per share cash offer for the company. Should BCA declare a dividend, then the offer price will reduced accordingly, it noted.The deal values BCA as a whole at GBP1.91 billion.The 243p offer price represents a 25% premium to BCA's closing 195p share price on Wednesday. Under UK takeover rules, TDR is required to make an offer by July 18, or walk away.Dunelm also finished the day in positive territory, up 9.4%. The home furnishings retailer said it expects its full-year results to be "ahead" of its previous expectations following "strong" trading in May and June.Dunelm explained that it had been a "very good" year for like-for-like sales with performance particularly strong in May and June, helped a weaker performance during the same period the year prior.The FTSE 250-listed firm now expects to report pretax profit for the year ended June 27 of between GBP124 million and GBP126 million. In early April, Dunelm had forecast pretax profit at the top of the analyst range of GBP115.6 million to GBP118.5 million. In financial 2018, Dunelm reported underlying pretax profit of GBP102.0 million.Fellow retailer Dixons Carphone had a tougher session, shedding 6.1% after warning that an increasingly changing UK mobile market will further hurt results in the new 2020 financial year.For the year ended April 27, the phone and electrical goods retailer sank to a GBP259 million pretax loss from a GBP289 million profit the year prior. This was after revenue fell 1.0% to GBP10.43 billion from GBP10.53 billion the year before.The company expects its UK mobile division to be significantly loss making in 2020 financial year, with sales and profit growth in the Electricals division across all operating regions.Dixons Carphone proposed a 4.50 pence per share final dividend, down from 7.75p the year prior. Total 2019 financial payout stood at 6.75p, down from 11.25p. The retailer expects total dividend for 2020 financial to be flat year-on-year.In the economic calendar on Friday, Japanese consumer prices are at 0050 BST and the manufacturing PMI at 0130 BST. In Europe, manufacturing and services PMIs are due from France, Germany and the eurozone at 0815 BST, 0830 BST and 0900 BST respectively. In the UK, public sector net borrowing is at 0930 BST and US manufacturing and services PMIs are due at 1445 BST.London Close is available to subscribers as an email newsletter. Contact info@alliancenews.com

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