LONDON (Alliance News) - London equities indices pushed higher Friday following better-than-expected economic results from key nations in the eurozone, while oil stocks were bolstered as Brent oil surpassed the USD60 a barrel mark for the first time this year.
The FTSE 100 closed up 0.7% at 6,873.52, having hit a high of 6,887.57, its highest level since early September. The FTSE 250 closed up 0.2% at 16,847.78, having reached a new record high at 16,917.46. The AIM All-Share closed up 0.3% at 700.18.
European stocks also hit notable highs, with the CAC 40 in Paris reaching its highest level since June 2008, at 4,779.54, and closed up 0.7% at 4,759.36. The DAX 30 in Frankfurt pushed to a new record high at 11,013.85 and closed up 0.4% at 10,963.40.
Wall Street followed the European rally to trade higher at the close of London stock markets. The DJIA traded up 0.3%, having surpassed 18,000 for the first time in 2015. The S&P 500 was up 0.3% and touched an all-time high of 2,094.74 , while the Nasdaq Composite was trading up 0.3%. US stock markets will be closed Monday to celebrate President's Day.
Fourth-quarter gross domestic product data for the eurozone as a whole and for Germany and France provided a mixed but generally better-than-expected growth picture.
The euro area economy expanded by more than expected in the fourth quarter, flash estimates released by Eurostat showed. GDP advanced 0.3% sequentially, faster than the 0.2% growth seen in the third quarter. The rate had been expected to remain unchanged at 0.2%.
On a yearly basis, eurozone GDP grew 0.9% following the third quarter's 0.8% expansion. Economists had forecast GDP to grow 0.8% again in the fourth quarter.
Among big eurozone members, Germany's economic growth accelerated by more-than-expected on the back of domestic spending and exports in the fourth quarter, while investment dragged expansion in France.
German GDP advanced 0.7% sequentially in the fourth quarter, much faster than a modest 0.1% rise in the prior quarter, data from Destatis revealed. This was the fastest growth in three quarters and also exceeded a 0.3% rise forecast by economists.
German households markedly raised their spending, and investment increased from the prior quarter in machinery and equipment as well as construction. Exports of goods improved further.
The statistical office raised its whole-year growth for 2014 to 1.6% from 1.5% estimated on January 15. The European Commission expects the largest Eurozone economy to grow by 1.5% this year and by 2% in 2016.
Germany looks set to continue surfing on a wave of economic well-being, said Carsten Brzeski, an economist at ING Bank. With the strong labour market, wage increases, low energy prices and extremely low interest rates, consumers should continue to spend, the economist said. Brzeski also expects the weak euro to benefit German exports.
Meanwhile, French economic growth slowed as expected in the fourth quarter, the statistical office Insee reported. GDP rose 0.1% sequentially, in line with forecast, but slower than third quarter's 0.3% expansion. In 2014, the economy expanded 0.4%, the same rate of growth as seen in 2013. The European Commission has forecast the French economy to expand 1% in 2015 and 1.8% next year.
UBS economist Reinhard Cluse sees upside risks to the bank's eurozone growth forecast of 1.2% for 2015 and 1.6% for 2016. The analyst said stronger growth in the US, easy European Central Bank monetary policy - supported by the weaker euro - and real income gains due to negative inflation and falling oil prices all will support eurozone growth. Cluse also noted the moderation in fiscal austerity and the gradual healing of the European banking sector as potential economic drivers but expressed caution towards events in Greece and Ukraine.
Oil producers were amongst the best performers in the FTSE 100 and FTSE 250, after the price of Brent oil surpassed the USD60 a barrel mark for the first time since the end of December. At the end of London equity trade Brent traded at USD61.32 a barrel.
Tullow Oil, up 5.2% was the biggest gainer in the FTSE 100. BG Group, up 3.7%, and BP, up 2.2% and Royal Dutch Shell 'A', up 1.7%, were all top blue-chip performers.
Travel stocks, meanwhile, were amongst the biggest FTSE 100 fallers, with Carnival falling 2.1%, easyJet declining 2.0% and International Consolidated Airlines Group closing down 1.3%.
In the FTSE 250, Premier Oil closed up 8.9%, SOCO International up 2.7%, and Afren up 2.3%.
Afren said the proposed takeover offer from SEPLAT Petroleum Development Co will not proceed, but the Nigerian oil and gas exploration and development company said that it reserves the right to "announce an offer or possible offer or make or participate in an offer or possible offer" for Afren within the next six months under certain circumstances or with the consent of the Panel on Takeovers and Mergers. SEPLAT shares closed flat.
Anglo American, up 3.3%, was amongst a number of miners in the top FTSE 100 performers. The company reported an expected drop in underlying earnings in 2014 on the back of weaker commodity prices. The company also took a USD3.9 billion impairment charge, mainly related to its iron ore mine in Brazil, which led to a wider net loss. However, it maintained its dividend unchanged. According to Investec, the company's earnings-per-share of 173 cents per share beat consensus of 164 cents.
Rolls-Royce was another strong blue-chip performer, closing up 4.7%. The jet engine and power turbine company reported a sharp drop in pretax profit following a 2014 hit by currency fluctuations, cuts to defence spending, and global macroeconomic uncertainty. However, Cantor Fitzgerald analyst Andy Chambers said the results were positive, with revenues and underlying of pretax profit coming in line with expectations.
RPS Group closed as the third best performer in the FTSE 250, up 7.5%. The energy consultancy said it has acquired Texas-based Klotz Associates in a USD24.1 million all-cash deal. Klotz provides engineering, planning and environmental consultancy services. For the year to the end of December, Klotz reported a pretax profit of USD3.6 million on revenue of USD26.2 million, RPS said.
The economic calendar on Monday is very quiet, with no US releases due to its holiday. Japan GDP is due at 2350 GMT Sunday, with the UK Rightmove house price index at 0100 GMT and eurozone trade balances for December at 1000 GMT. The most important event is the Eurogroup meeting of finance ministers, the second to discuss next steps for Greece following Wednesday's meeting.
In the corporate calendar Monday, full-year results are expected from property company Hammerson, gold miner Acacia Mining, and trading software and services company Fidessa Group. Parcels, mail and logistics operator DX (Group) will issue half-year results, while Infinis Energy will release an interim management statement.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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2 Jun 2015 14:23
