LONDON (Alliance News) - UK stocks closed higher Wednesday as expectations of further stimulus measures by China boosted global equities markets, though a strong US job openings report prompted a late pull-back as it supports an earlier US interest rate hike.
The FTSE 100 index closed up 1.4% at 6,229.01, meaning the blue-chip index has now managed to post three successive sessions of gains for the first time since the end of July. The FTSE 250 added 0.9% at 17,153.28, but the AIM All-Share edged up just 0.2% to 736.30.
In Europe, the CAC 40 index in Paris rose 1.4% and the DAX 30 in Frankfurt ended up 0.3%.
On Wall Street at the London close, the Dow 30 index, S&P 500 and Nasdaq Composite all were trading up 0.1%. US attention was focused on Apple. The tech giant was widely expected to unveil the new iPhone 6S and a new iPad at an event in San Francisco at 1800 BST. Ahead of the event, Apple shares were trading flat.
London had been trading higher from the open following a strong session for Asian equities markets. The Japanese Nikkei closed up 7.7%, its biggest one-day percentage gain since October 2008. The Hang Seng rose 4.1% and the Shanghai Composite 2.3%.
The Chinese Ministry of Finance late Tuesday announced a number of new measures to reform taxes, boost infrastructure spending, and bring in private financing through increased use of the public-private partnership model. The article on the organisation's website made no mention of the actual size of the stimulus.
"The stronger proactive fiscal policy stance is in line with our view that fiscal stimulus will play a larger role in boosting growth in H2," said analysts at Nomura. "We maintain our forecast that the fiscal deficit will widen to 2.8% of GDP in 2015 from a budgeted 2.3%. In our opinion, there could be some front-loading of infrastructure projects marked for next year."
The Japanese market was supported by Prime Minister Shinzo Abe's pledge to cut corporate tax rates to shore up economic growth.
However, London stocks gave up some gains towards the close following the release of a strong JOLTS job openings report, which would count in favour of a September US interest rate hike.
The US Bureau of Labor Statistics reported that job openings in July rose to 5.8 million from the 5.3 million seen in June and surpassing expectations of a 5.3 million increase. The Bureau said this was the highest since the series began in December 2000, beating the prior high of 5.4 million in May.
"Following last Friday's clarity-lacking jobs report, with strong upwards revisions for June and July's non-farm figures but a big miss in the August number, a strong unemployment rate figure and unexpected wage growth, today’s JOLTS job openings number perhaps carried more weight than usual," said Connor Campbell, financial analyst at Spreadex.
"It's a hawk-boosting number that saw the Dow fall from a 160 point jump after the open to a cooler 80 point increase on the day," Campbell added.
The rise in the London stock market was led by miners on the back of the expected stimulus in China. Of the FTSE 100 miners, Glencore closed up 6.1%, Anglo American up 5.5%, and BHP Billiton up 4.7%.
Anglo American also said its Rustenberg Platinum Mines arm has entered into a deal to sell the Rustenberg mine and concentrating operations in South Africa to Sibanye Gold. The Anglo-South African miner said it has sold the stake for at least ZAR4.5 billion, or about GBP215.6 million at current exchange rates.
Hargreaves Lansdown ended the day as the best blue-chip performer, up 7.4%. The fund supermarket set out its intent to return to "health profit growth" after reporting a drop in earnings in its most recently ended financial year.
Pretax profit amounted to GBP199.0 million in the year ended June 30, down from GBP209.8 million in the prior year, but the wealth management company raised its dividend for the year to 33 pence per share from 32.0p.
Net revenue, a closely watched measure of year-on-year comparative performance, edged up to GBP294.2 million from GBP291.9 million, bolstered by higher assets under administration, which rose to GBP55.2 billion from GBP46.9 billion over the year, net new business inflows of GBP6.1 billion, 84,000 new active clients and transaction volumes.
Wm Morrison Supermarkets confirmed it is selling 140 M local convenience stores for GBP25 million in cash, taking a loss on the sale, to a team led by retail entrepreneur Mike Greene. The grocer said it will retain five M local stores which are either on forecourts or will be converted to small Morrisons supermarkets.
The stores are being sold to an investor group led by Greene, a former executive at convenience store chain Spar, and backed by private equity company Greybull Capital. Morrisons' shares closed up 3.5%, ahead of its interim results on Thursday.
GlaxoSmithKline ended as the worst FTSE 100 performer, down 1.2%. The drugmaker and partner Theravance late on Tuesday announced the initial results from the Study to Understand Mortality and MorbidITy, or SUMMIT, trials conducted on the Relvar/Breo Ellipta drugs for the treatment of chronic obstructive pulmonary disease (COPD).
Glaxo said the risk of dying taking the drug dose was 12.2% lower than on placebo over the study period, which is not statistically significant and therefore meant the drug did not meet its primary endpoint. The treatment also missed two secondary endpoint goals.
Shares in Crest Nicholson Holdings, up 4.1% and Foxtons Group, up 3.8%, were boosted by upgrades from Goldman Sachs. The bank upgraded Crest to Conviction Buy from Neutral and Foxtons to Neutral from Sell in a note on the UK housing sector.
Goldman said its confidence in the UK housing sector was backed by housebuilding data remaining robust and by lead indicators on transactions pointing to an improvement in the second half, following a subdued first hit by uncertainty surrounding the General Election in May.
Virgin Money Holdings was the second worst midcap performer, down 4.6%, after Wilbur Ross on Tuesday launched a share sale in the company, Reuters reported, citing a bookrunner. WL Ross & Co was said to be selling up to 45 million shares in Virgin Money via accelerated bookbuild, according to the report on Tuesday. The shares that were to be sold equate to about 10.2% of Virgin, according to that report.
In the economic calendar Thursday, Chinese inflation data are due before the London open at 0230 BST. Later in the day, the Bank of England releases its interest rate decision, monetary policy statement and Monetary Policy Committee meeting minutes at 1200 BST. US initial and continuing jobless claims are at 1330 BST, alongside import and export price indices. At 1600 BST, there is Energy Information Administration crude oil stocks.
In the UK corporate calendar, Morrisons and fashion retailer Next both release half-year results, while electricals retailer Dixons Carphone issues an interim management statement. Home furnishings retailer Dunelm Group releases full-year results, while Home Retail Group issues a second quarter trading statement.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
Copyright 2015 Alliance News Limited. All Rights Reserved.
