LONDON (Alliance News) - UK Chancellor George Osborne again pledged to stick with the government's policy track Tuesday, as new figures showed the economy expanded at the fastest rate since the financial crisis last year but has still not fully recovered from the recession.
Latest gross domestic product figures showed national output expanded 1.9% in 2013, the highest rate since 2007. However, GDP remained 1.3% below the peak in the first quarter of 2008. From peak-to-trough in 2009, the economy shrank 7.2%.
There was also a slight slowdown in the fourth quarter, with GDP up 0.7% compared with 0.8% growth in the third quarter. The growth was driven by the services sector, which was partly offset by a contraction in the construction sector.
"It is more evidence that our long-term economic plan is working," Osborne said. "But the job is not done, and it is clear that the biggest risk now to the recovery would be abandoning the plan that's delivering jobs and a brighter economic future."
The GDP data helped the London equity markets snap a three-day losing streak Tuesday, with markets up across Europe after the recent losses that were caused by concerns about emerging markets. With the Federal Reserve expected to further reign in its asset buying programme Wednesday, investors are pulling money out of emerging markets and diverting it back to the US.
In India, one of the largest emerging markets, the central bank raised its key interest rates unexpectedly on Tuesday to combat sticky inflation, but sees no further tightening in the near-term if consumer price inflation comes down.
Early indications are pointing to a mixed start on Wall Street Tuesday, as Apple's insipid guidance threatens to weigh on markets there. Apple late Monday reported first quarter earnings that beat analysts' forecasts, but its second-quarter revenue guidance was weak. That has weighed on ARM Holdings' shares Tuesday morning.
In other individual stock news, F&C Asset Management took just a day to reach an agreed takeover deal with Bank of Montreal after revealed the approach Monday. It has agreed a GBP708 million deal, with shareholders getting 120 pence a share in cash plus the 2 pence dividend F&C had already declared.
The deal will double BMO Global Asset Management's assets under management and boost its presence in Europe and the UK. F&C Asset Management had GBP82 billion in assets under management at the end of 2013, it revealed Tuesday.
Shares in Royal Bank of Scotland are up, despite Monday's late warning it has set aside a further GBP3.07 billion to cover past issues, the bulk of which relate to litigation and regulatory decisions regarding mortgage-backed securities and securities sold in the years leading up to the financial crisis of 2008.
Over in Europe, EU finance ministers are discussing Tuesday how to proceed on a controversial scheme to wind down troubled banks in the eurozone, with less than three months left to finalize the much-touted measure. Meant to help shield taxpayers from bank bailouts, the new set-up would be part of a crisis-thwarting banking union - considered key to restoring trust in the eurozone.
EU finance ministers hammered out a compromise on the scheme in December, but an agreement now has to be struck with the European Parliament, which is unhappy about the ministers' approach.
In Ukraine, Prime Minister Mykola Azarov has offered his resignation to end the country's political crisis, just before parliament repealed a series of laws that had led to the current surge in anti-government protests following talks with opposition leaders. Lawmakers voted 361-2 to revoke nine laws that had been criticised as stifling dissent and free speech.
Syrian government and opposition delegations are due to resume direct talks Tuesday, after discussions over an interim administration for the war-torn country stalled. UN and Arab League peace envoy Lakhdar Brahimi has said that the second day of direct talks would again focus on the political framework agreed by talks sponsors the US and Russia.
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FTSE 100: up 0.4% at 6,576.32
FTSE 250: up 1.2% at 15,710.80
AIM ALL-SHARE: up 0.8% at 856.96
GBP-USD: 1.6570
EUR-USD: 1.3640
GOLD: USD1,254.56 an ounce
OIL (Brent): USD106.85 a barrel
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KEY UK CORPORATE NEWS:
FTSE 100: British Land's like-for-like occupancy rose 30 basis points to 97.1% following strong interest in its portfolio in its third quarter. It signed 386,000 square feet of retail lettings/renewals, driving UK retail occupancy up 40 basis points to 98.4%, and 139,000 square feet of office lettings/renewals. Investment lettings/renewals were 6.8% ahead of estimated rental value. Its joint venture with Oxford Properties has also signed a new letting with serviced office business, Servcorp, for level 30 at the Leadenhall Building. Fresnillo's 2013 gold production ended slightly below its revised guidance due to the explosives suspension at properties in Mexico. Attributable gold production was 425,831 ounces, down 10% from 473,034 ounces in 2012 and slightly lower than its revised gold production guidance of 425,900 ounces. AMEC's AMEC Tekfen Azfen consortium has been awarded a USD974 million contract for the BP-operated stage 2 development of the Shah Deniz gas field in the Caspian Sea. ARM Holdings is down on read-across from a weak outlook from Apple, which lost market share in the smartphone market in 2013.
FTSE 250: Crest Nicholson cited the Help-to-Buy scheme for helping drive renewed interest in new builds as it reported a 40% increase in pretax profit for its last financial year. Revenues were up 29%. Afren achieved the upper end of its full year 2013 production guidance and improved revenues following a major oil find offshore Nigeria in November. Irish convenience-foods manufacturer Greencore has posted revenue growth of 7.2% for the 13 weeks to December 27, and said it remains confident in meeting full-year market expectations. Galliford Try's partnerships business has been selected for new affordable housing and extra-care contracts worth a total of GBP55.2 million. James Fisher & Sons has bolstered its marine support services unit with the GBP2.5 million acquisition of Subsea Vision.
AIM: Globo is a big gainer after it said it expects 2103 profit to be in line with expectations following a 57% increase in revenues to EUR72 million. Ilika is another big riser after it said the electrochemical testing of its stacked solid-state batteries, manufactured using its recently discovered process, had shown the battery to produce twice the voltage and power of a single cell battery. Evocutis is up as it said it expects discussions over the sale of its technology and assets to be concluded within three months. Infrastrata is a big decliner after BP decided to relinquish its option to acquire a 50.495% stake in Islandmagee Storage Ltd. Infrastrata said that funding from BP over the past two years has enabled the site to progress significantly, including securing land rights, planning permission, and capital investment, along with sub-surface and pipeline leases with the Crown Estate. Mariana Resources is down despite it saying that it will continue its Condor de Oro option in Peru after achieving further positive results from its scout drilling programme. Shore Capital said it was unimpressed with the results from the site so far. ACTA is also down after it said it expects to report revenues of more than EUR400,000 for 2013, up on the EUR233,000 it reported for 2012, but warned that sales conversions had been slower that it had forecast. The company said it now expects to report an operating loss of about EUR1.2 million, including the share option cost reversal of EUR2.4 million that it had already flagged. Sylvania Platinum is another faller after warning that revenues fell in its second quarter due to lower platinum group metal prices.
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AFTERNOON WATCHLIST: EcoFin Meeting, US Durable Goods Orders, US Redbook Index, US Consumer Confidence, US Richmond Fed Manufacturing Index
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Wednesday's Key UK Corporate Events
Liontrust Asset Management Interim Management Statement
Britvic Interim Management Statement
Anglo American Production Report
Advance Developing Markets Fund Full Year Results
Anglo Platinum Production Report
Antofagasta Production Report
Staffline Group Preliminary results
BTG Interim Management Statement
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Wednesday's Key Economic Events
02:00 US President Obama speech
07:00 Germany Gfk Consumer Confidence Survey
07:00 UK Nationwide Housing Prices
09:00 Italy Business Confidence
12:00 US MBA Mortgage Applications
15:30 US EIA Crude Oil Stocks change
19:00 US Fed Interest Rate Decision
23:50 Japan Foreign bond investment
23:50 Japan Retail Trade
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By Steve McGrath; steve.mcgrath@alliancenews.com; @stevemcgrath1
Copyright © 2014 Alliance News Limited. All Rights Reserved.
22 Jul 2016 08:08
