LONDON (Alliance News) - The FTSE 100 hit a 14-year high at 6,898.62 on Wednesday morning as it was spurred on by hopes of European Central Bank action amid poor economic data from Europe and hopes a permanent peace deal can be brokered between Ukraine and pro-Russian separatists.
After a pull-back in late trade, the FTSE 100 ended the day up 0.7% at 6,873.58, while the FTSE 250 lagged behind, closing up 0.2% at 15,991.9, and the AIM All-Share index fell 0.1% to 778.9.
European stocks outperformed the UK throughout the day, with the CAC 40 in Paris ending the day up 0.9% and the DAX in Frankfurt up 1.1%.
US stocks were more mixed. At the close of European markets, the DJIA was trading up 0.2%, while the S&P 500 was flat and the NASDAQ Composite was down 0.4%.
The UK began the day trading higher on the back of a strong Chinese service-sector purchasing managers' index. The HSBC survey for August came in at at 54.1, ahead of July's figure of 50.0.
However, the FTSE 100 made its sharpest gains of the day following disappointing service PMI data from the eurozone and its key constituents. Germany, the region's biggest economy, posted a reading of 54.9, down from July's figure of 56.7 and below the market forecast of 56.4. The eurozone as a whole came in at at 52.5 in August, less than the flash estimate of 52.8 and below July's figure at 53.8.
Further signs of weakness in the European economy could prompt the ECB to initiate quantitative easing at its interest rate meeting on Thursday, potentially giving the eurozone's economy a much-needed boost.
Stocks were also given a boost after Russian President Vladimir Putin and Ukrainian President Petro Poroshenko said that they had reached an agreement to end the conflict in eastern Ukraine.
The deal, agreed to in a telephone conversation, centres on a ceasefire between government troops and pro-Russian separatists, which have been fighting for more than five months. Putin presented a seven point plan that includes a bilateral ceasefire, and said an agreement on the plan should be reached Friday in Minsk, Belarus, during fresh talks between the separatists and the so-called contact group of Russia, Ukraine and the Organization for Security and Co-operation in Europe.
"Earlier in the week it seemed as if the situation there was worsening and the rhetoric surrounding it becoming more worrying, but it appears Messrs Putin and Poroshenko have heeded the wisdom of Winston Churchill, deciding that ‘jaw-jaw is better than war-war’," said Chris Beauchamp, market analyst at IG.
"The reaction on indices was immediate, and although the DAX has failed to hold its earlier highs, it is a clear sign that the prospect of further deterioration in relations between the major powers was beginning to act as a significant downward force on equity markets," he added.
Also supporting the London market was a strong UK services PMI reading for August. The index came in at 60.5, above the July figure of 59.1 and outstripping the consensus estimate of 58.5. The result builds on Tuesday's positive construction PMI results and signals a continued recovery in the UK economy.
Ashtead Group ended the day atop the FTSE 100, its shares rising 3.6%. The company said it expects its full-year results to be above previous expectations, after a strong first-quarter performance in both its US and UK businesses, driven by new store openings and bolt-on acquisitions, continued into August. The company also increased its capital expenditure plans for the year as a whole, pledging to continue investing in organic growth thanks to the momentum it is seeing in the business. Ashtead reported a pretax profit of GBP117.5 million for the three months to July 31, up from GBP97.4 million a year earlier, as revenue rose to GBP457.9 million, from GBP410.5 million.
Meanwhile, retail stockbroker Hargreaves Lansdown was the worst performer on the blue-chip index, falling 5.8%. The company said it made a GBP209.8 million pretax profit in the year ended June 30, compared with GBP195.2 million in the corresponding period last year. Revenue increased to GBP358.4 million from GBP292.4 million, due to growth in complementary services such as stockbroking, fund management, discretionary management and pension drawdown services, the company said. However, according to Liberum, the company is facing severe margin pressure as a result of the recently implemented UK Retail Distribution Review.
Focus turns to central banks on Thursday, starting with the Bank of England interest rate decision at 1200 BST, followed by the ECB interest rate decision at 1315 BST and monetary policy statement and press conference at 1330 BST. Later in the day, US ISM non-manufacturing PMI for August will be released at 1500 BST.
In the corporate calendar, FTSE 250 listed Go-Ahead Group will be releasing its full-year results. The company on Wednesday was added to Goldman Sachs 'Conviction-Buy list'. In addition, fellow FTSE 250-listed companies Betfair Group and SuperGroup will be releasing interim management statements.
By Neil Thakrar; neilthakrar@alliancenews.com
Copyright 2014 Alliance News Limited. All Rights Reserved.
15 Jan 2024 12:09
Train drivers announce fresh strike dates
(Sharecast News) - Train drivers' union Aslef announced a new round of strikes on Monday, in its ongoing pay dispute with 16 train operators.
Read more