LONDON (Alliance News) - The UK's main stock indexes all closed higher Wednesday, tracking gains in the US ahead of the minutes from the US Federal Reserve's last policy meeting, while the pound reached a multi-day high against other major currencies after the Bank of England released the minutes form its own meeting and UK retail sales growth hit a ten-year high.
The FTSE 100 closed up 0.3% at 6,821.04, while the mid-cap FTSE 250 outperformed for the third consecutive day, closing up 1.1% at 15,603.20, and the AIM All-Share closed up 0.3% at 791.57.
Most of the move higher came after Wall Street peformed well in early trading. The DJIA was up 0.7% when the European markets closed, while the S&P 500 was up 0.4%, and the Nasdaq Composite up 0.3%.
In Europe, the French CAC 40 closed up 0.4%, and the German DAX closed up 0.6%.
"A sharp about-turn in US markets has dragged the FTSE 100 higher, although with only a 0.3% gain it is sulkily refusing to take part enthusiastically in the rapid return of risk appetite," said IG market analyst Brenda Kelly.
The FTSE 250 has taken back some of the steep losses it experienced at the end of last week, but the FTSE 100 was held back by a number of stocks going ex-dividend. HSBC closed down 1.6% after going ex a 10 pence first-quarter dividend, and Intertek Group closed down 1.2% after going ex a 31 pence full-year dividend.
Telecom Plus was the stand out mover Wednesday, closing up 11% at the top of the FTSE 250. The utility firm, which trades under the Utility Warehouse brand, said higher customer numbers helped drive a rise in revenue and pretax profit its last financial year and it remains comfortable with market expectations for a near 50% increase in adjusted pretax profit this year. It raised its dividend for the full-year to 35 pence per share, from the 31 pence it paid for fiscal 2013.
Britvic, which closed up 7.9%, also helped the mid-cap index outpeform. The drinks maker reported strong revenue, profit and margin growth in the first half of its financial year, supported by volume increases, higher prices and increased market share. It also raised its interim dividend by 13%, highlighting a confident outlook for the year ahead.
Morrison Supermarkets was the biggest faller in the FTSE 100, down 2.2% after Deutsche Bank downgraded the stock to Sell, from Hold, and lowered its price target to 190.00 pence from 200.00p, saying that the group's recent share price performance is unjustified. Morrison's share price has rallied 10% in the past two weeks, outperforming the FTSE 100 by 10%, and rivals J Sainsbury and Tesco by 3% and 1%, respectively, says Niamh McSherry, an analyst at Deutsche Bank. "Neither incremental news flow nor fundamental valuation supports the recent share price move," McSherry says.
Burberry Group ended only slightly higher after a positive start, closing up 0.2%. The luxury retailer said that demand for its luxury outerwear, leather goods and menswear continued unabated in Asia, driving a return to growth in its annual profit. Its figures met analyst expectations. It also appointed easyJet Chief Executive Carolyn McCall to its board as a non-executive director.
The pound rose Wednesday after the release of much stronger-than-expected retail sales data, as well as the minutes from the BoE's May 7 to 8 Monetary Policy Committee meeting, which showed the MPC members in a slightly more hawkish mood than the recent inflation report had suggested.
The pound jumped against other major currencies, reaching to an eight-day high against the dollar at USD1.6921, and a high for the year against the euro at EUR1.2364.
UK retail sales jumped 6.9% year-on-year in April, up from a 4.8% increase in March and exceeding economists' expectations for a more modest rise of 5.2%. The reading, driven by growth in food sales around the Easter week when the weather was fair, represents the strongest growth since May 2004. Month-on-month, retail sales growth rose 1.3% in April, from 0.5% in March, beating economists' expectations for growth to remain steady.
"Retail sales were a key driver of pound strength this morning," said Forex.com research director Kathleen Brooks. "The weather has remained good in May, which may fuel expectations that this al fresco dining will continue, and retail sales could remain strong in the coming months even without the help of the Easter Bunny."
The BoE minutes, released at the same time at the retail sales data, showed that the MPC unanimously agreed to keep the Bank Rate on hold at 0.5%, as well as all agreeing to maintain the current GBP375 billion stock of purchased assets.
The minutes said the rate setters think there remains between 1% and 1.5% "slack" to be used up within the economy, and although recent measures of the UK economy have been considerably stronger than expected, growth, and therefore the speed at which the economy uses up that slack, will slow going forwards "as the initial fillip from the release of pent-up demand faded".
The support for the pound came from an element of disagreement between the MPC members over the timing of events, with the minutes noting "considerable uncertainty" around how quickly the slack will be used up, as well as that for some members "the monetary policy decision was becoming more balanced".
The main event in the global market calendar is still to come Wednesday, with the release of the latest FOMC minutes at 1800 GMT. While few expect there to be any changes to recent comments from Fed officials with regard to the specific timing of a US interest rate rise, "what will be of more importance will be how much “slack” is believed to be left in the labour market and how that should affect the timing of rate hikes," said CMC Markets market analyst Jasper Lawler.
Thursday is a busy day for economic data, starting with the latest HSBC China manufacturing PMI, released overnight. The Markit European PMI readings for May are then released throughout the morning, finishing with the eurozone numbers at 0900 BST. Economists expect the eurozone composite PMI to continue to show reasonable growth but slip very slightly to 53.9 from 54.0 in April.
From the UK Thursday, the preliminary reading of first quarter GDP will be released at 0930 BST, with economists looking for a year-on-year growth rate of 3.1%, and quarter-on-quarter growth of 0.8%. Business investment data, initial public borrowing numbers, and BBA mortgage applications data are also all due at the same time.
US initial jobless claims and the Markit manufacturing PMI are due Thursday afternoon.
In the UK corporate calendar, full-year results are due from SABMiller and Royal Mail, along with Booker Group, Dairy Crest, Halfords, Investec, Mitchells & Butlers, Mothercare, QinetiQ Group, and Electrocomponents.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
Copyright 2014 Alliance News Limited. All Rights Reserved.
UK earnings, trading statements calendar - next 7 days
Wednesday 24 April | |
1Spatial PLC | Full Year Results |
abrdn PLC | Trading Statement |
Ecora Resources PLC | Trading Statement |
Fresnillo PLC | Trading Statement |
Lloyds Banking Group PLC | Q1 Results |
Nichols PLC | Trading Statement |
PensionBee Group PLC | First Quarter Results |
PZ Cussons PLC | Trading Statement |
Quilter PLC | Q1 Results |
Reckitt Benckiser Group PLC | Trading Statement |
Sanderson Design Group PLC | Full Year Results |
Serica Energy PLC | Full Year Results |
Star Energy Group PLC | Full Year Results |
Tortilla Mexican Grill PLC | Full Year Results |
Tracsis PLC | Half Year Results |
Warpaint London PLC | Full Year Results |
Thursday 25 April | |
Aquila European Renewables PLC | Full Year Results |
Argo Blockchain PLC | Full Year Results |
AstraZeneca PLC | Q1 Results |
Barclays PLC | Q1 Results |
Checkit PLC | Full Year Results |
Coca-Cola Europacific Partners PLC | Trading Statement |
Destiny Pharma PLC | Full Year Results |
Dillistone Group PLC | Full Year Results |
Focusrite PLC | Half Year Results |
Gem Diamonds Ltd | Trading Statement |
Hikma Pharmaceuticals PLC | Trading Statement |
Hummingbird Resources PLC | Trading Statement |
Ibstock PLC | Trading Statement |
Inchcape PLC | Trading Statement |
J Sainsbury PLC | Full Year Results |
London Stock Exchange Group PLC | Q1 Results |
Persimmon PLC | Trading Statement |
Pinewood Technologies Group PLC | Full Year Results |
PPHE Hotel Group Ltd | Trading Statement |
PureTech Health PLC | Full Year Results |
Relx PLC | Trading Statement |
Renewi PLC | Trading Statement |
Schroders PLC | Q1 Results |
Skillcast Group PLC | Full Year Results |
Travis Perkins PLC | Trading Statement |
Trifast PLC | Trading Statement |
Unilever PLC | Q1 Results |
WAG Payment Solutions PLC | Trading Statement |
Weir Group PLC | Trading Statement |
WH Smith PLC | Half Year Results |
WPP PLC | Trading Statement |
Zinc Media Group PLC | Full Year Results |
Friday 26 April | |
Facilities by ADF PLC | Full Year Results |
Kingspan Group PLC | Trading Statement |
NatWest Group PLC | Q1 Results |
Pearson PLC | Trading Statement |
Record PLC | Trading Statement |
Smurfit Kappa Group PLC | Trading Statement |
Taylor Maritime Investments Ltd | Trading Statement |
Monday 29 April | |
Beazley PLC | Trading Statement |
Biome Technologies PLC | Full Year Results |
Christie Group PLC | Full Year Results |
Gresham Technologies PLC | Full Year Results |
Jadestone Energy PLC | Full Year Results |
Oxford BioMedica PLC | Full Year Results |
SpaceandPeople PLC | Full Year Results |
Tuesday 30 April | |
Avacta Group PLC | Full Year Results |
Card Factory PLC | Full Year Results |
Capital & Regional PLC | Full Year Results |
Coca-Cola HBC AG | Trading Statement |
Elementis PLC | Trading Statement |
essensys PLC | Half Year Results |
Fadel Partners Inc | Full Year Results |
Glencore PLC | Trading Statement |
Hargreaves Lansdown PLC | Trading Statement |
Howden Joinery PLC | Trading Statement |
HSBC Holdings PLC | Q1 Results |
Kelso Group PLC | Full Year Results |
Northcoders Group PLC | Full Year Results |
Phoenix Spree Deutschland Ltd | Full Year Results |
RBG Holdings PLC | Full Year Results |
Rotork PLC | Trading Statement |
Safestore Holdings PLC | Half Year Results |
Shield Therapeutics PLC | Full Year Results |
St James's Place PLC | Trading Statement |
Whitbread PLC | Full Year Results |
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