LONDON (Alliance News) - London shares closed mixed Tuesday after investor's attention was divided between Greece, the nuclear agreement that lifts US and European Union oil exports sanctions to Iran and Bank of England Governor Mark Carney's warning that UK interest rates may rise soon.
Speaking in front of the Treasury Committee in the House of Commons on Tuesday morning, BoE Governor Mark Carney gave the pound a lift, while pushing down equities, with the FTSE 100 dropping heavily after the UK central bank Governor suggested that the BoE soon could start to normalise UK monetary policy.
However, the blue-chip index recovered throughout the session, ending up 0.2% at 6,753.75. The FTSE 250 closed down 0.4% at 17,642.40 and the AIM All-Share finished up 0.4% at 755.14.
In Europe, the CAC 40 closed up 0.6% and the DAX 30 was up 0.2%.
"The point at which interest rates may begin to rise is moving closer, given the performance of the economy," Carney said. There would inevitably be "shocks and adjustments," he cautioned, while he reiterated that the increase in rates would be limited and gradual.
When the London equity markets closed the pound was at USD1.5582 after jumping following Carney's remarks from USD1.5475 prior.
Meanwhile, UK inflation returned to zero in June, data published by the Office for National Statistics showed. Consumer prices remained flat on a yearly basis in June as expected by economists, after rising 0.1% in May. The consumer price index remained flat on a monthly basis as well, in contrast to a 0.2% increase in May and a 0.1% rise forecast by economists.
Foreign ministers from six world powers and Iran reached a long-awaited agreement to prevent the country from developing nuclear weapons following a final marathon round of talks in Vienna. The agreement restricts Iran's nuclear activities for years to come in an effort to prevent a new nuclear power from emerging in the conflict-ridden Middle East. In return, US and EU embargoes against Iran's oil exports and its international banking ties will be lifted.
The prospects of an even greater supply of oil onto the market sent crude oil prices lower in the session, however when the European equity markets closed Brent oil was flat at USD57.96 a barrel and US benchmark West Texas Intermediate was higher at USD52.95 a barrel.
In Greece, Prime Minister Alexis Tsipras faces a showdown with members of his Syriza party and coalition partners, who are angered by his capitulation to European demands for the most sweeping austerity package in the history of the common currency. Tsipras' coalition is in disarray over a preliminary deal brokered in Brussels that keeps the beleaguered Greek economy in the eurozone but bypasses many of the campaign pledges on which Syriza swept to power.
Before formal negotiations can begin on up to EUR86 billion in bailout funds, the Greek parliament must agree to legislate on a raft of measures that are even tougher than those rejected by more than 61% of Greeks in a July 5 referendum.
In the US, after reporting a sharp jump in retail sales in the previous month, the Commerce Department released a report on Tuesday showing that sales unexpectedly pulled back in the month of June.
The report said retail sales fell by 0.3% in June compared to economist estimates for an increase of about 0.3%. The unexpected drop in sales came after a 1.0 increase in May, which was revised downwards revised from an originally reported 1.2% jump.
The decline in retail sales data comes after US Federal Reserve Chair Janet Yellen said Friday that the US central bank is likely to begin tightening "at some point later this year" its benchmark interest rate in 2015 after seven years of unprecedented slack monetary policy.
"After signs were pointing towards a September lift-off [on US interest rates], severe misses in the latest retail sales figures suggests that the country’s second quarter recovery may not be as big as hoped," said Spreadex analyst Connor Campbell.
Wall Street was higher when the European stock markets closed, with the DJIA up 0.6%, the S&P 500 up 0.4% and the Nasdaq Composite up 0.7%.
On the London Stock Exchange, Sky ended as the biggest gainer in the FTSE 100, up 4.1%, after Deutsche Bank upgraded it to Buy from Hold. The bank says it believes the broadcaster is best positioned in Europe to capitalise from the acceleration in online video growth. However, ITV ended down 1.6% after Deutsche cut it to Sell from Hold.
Pearson ended down 1.8% after Morgan Stanley downgraded the publisher to Equal-Weight from Overweight, while Kepler Cheuvreux also cut the company to Hold from Buy.
International Personal Finance was the best performer in the FTSE 250, up 6.6%. Panmure Gordon upgraded the home credit and digital loans provider to Buy from Hold after a sharp sell-off Monday, when it dropped by 25%. The decline came after IPF said that there could be financial consequences from potential legal changes in Poland, that could result in a cap that covers a broader definition of non-interest costs than previously suggested.
Housebuilders took a hit after house price inflation in the UK accelerated in May from a 16-month low in the previous month, figures from the Office for National Statistics showed Tuesday. Average house prices climbed 5.7% year-over-year in May, slightly faster than April's 5.5% increase. In March, prices had risen 9.6%. The pace of annual house price growth rose slightly across the majority of the U.K in May, the ONS said.
Blue-chips Persimmon, down 1.5%, Taylor Wimpey, down 1.5%, Barratt Developments, down 1.1% and FTSE 250 constituents Bellway, down 3.5%, and Berkeley Group Holdings, down 2.5%, ended amongst the worst performers in their respective indices.
In the corporate calendar Wednesday, Burberry Group and JD Wetherspoon issue fourth-quarter interim management statements, while Severn Trent and Workspace Group issue first-quarter trading statements. ICAP releases first-quarter results and Halfords Group issues a trading update. Intermediate Capital publishes half-year results, Lavendon issues an interim management statement, while Moneysupermarket.com Group issues a trading update.
In the economic calendar, Chinese GDP is due at 0300 BST, while Chinese retail sales data is due at 0630 BST. UK claimant count and ILO unemployment rate are due at 0930 BST. In the US, industrial production is due at 1415 BST, while US producer prices index is due at 1430 BST. US Fed Chair Janet Yellen is due to give a speech in the Semiannual Monetary Policy Report to the US Congress at 1500 BST. EIA Crude Oil Stocks change is due at 1530 BST. Fed's Beige Book is due at 1900 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
Copyright 2015 Alliance News Limited. All Rights Reserved.
UK dividends calendar - next 7 days
Monday 6 May | |
no events scheduled | |
Tuesday 7 May | |
Begbies Traynor Group PLC | dividend payment date |
Ferguson PLC | dividend payment date |
Manchester & London Investment Trust PLC | dividend payment date |
Mobius Investment Trust PLC | dividend payment date |
Nexus Infrastructure PLC | dividend payment date |
Pebble Group PLC | dividend payment date |
Pinewood Technologies Group PLC | special dividend payment date |
Thungela Resources Ltd | dividend payment date |
Volution Group PLC | dividend payment date |
Wednesday 8 May | |
Melrose Industries PLC | dividend payment date |
Personal Group Holdings PLC | dividend payment date |
Thursday 9 May | |
Admiral Group PLC | ex-dividend payment date |
AG Barr PLC | ex-dividend payment date |
Aurora Investment Trust PLC | ex-dividend payment date |
Balanced Commercial Property Trust Ltd | ex-dividend payment date |
Bank of Ireland Group PLC | ex-dividend payment date |
Bellevue Healthcare Trust PLC | ex-dividend payment date |
Braime Group PLC | ex-dividend payment date |
Centaur Media PLC | ex-dividend payment date |
Chenavari Toro Income Fund Ltd | ex-dividend payment date |
Clarkson PLC | ex-dividend payment date |
Coca-Cola Europacific Partners PLC | ex-dividend payment date |
Custodian Property Income REIT PLC | ex-dividend payment date |
CVC Income & Growth Ltd EURO | ex-dividend payment date |
CVC Income & Growth Ltd GBP | ex-dividend payment date |
Domino's Pizza Group PLC | dividend payment date |
Epwin Group PLC | ex-dividend payment date |
F&C Investment Trust PLC | dividend payment date |
Fidelity Special Values PLC | ex-dividend payment date |
Focusrite PLC | ex-dividend payment date |
Grafton Group PLC | dividend payment date |
Gresham Technologies PLC | ex-dividend payment date |
Headlam Group PLC | ex-dividend payment date |
Henderson International Income Trust PLC | ex-dividend payment date |
HSBC Holdings PLC | ex-dividend payment date |
Ibstock PLC | ex-dividend payment date |
Invesco Perpetual UK Smaller Cos Investment Trust PLC | ex-dividend payment date |
JPMorgan Global Core Real Assets Ltd | ex-dividend payment date |
Lancashire Holdings Ltd | ex-dividend payment date |
LSL Property Services PLC | ex-dividend payment date |
M&C Saatchi PLC | ex-dividend payment date |
M&G PLC | dividend payment date |
Macfarlane Group PLC | ex-dividend payment date |
Marwyn Value Investors Ltd | ex-dividend payment date |
Midwich Group PLC | ex-dividend payment date |
Montanaro UK Smaller Cos Investments Trust PLC | dividend payment date |
Octopus Titan VCT PLC | ex-dividend payment date |
One Media iP Group PLC | ex-dividend payment date |
Petershill Partners PLC | ex-dividend payment date |
Picton Property Income Ltd | ex-dividend payment date |
PRS REIT PLC | ex-dividend payment date |
Reach PLC | ex-dividend payment date |
Sherborne Investors Guernsey C Ltd | ex-dividend payment date |
Sthree PLC | ex-dividend payment date |
Sylvania Platinum Ltd | ex-dividend payment date |
Taylor Maritime Investments Ltd | ex-dividend payment date |
Tracsis PLC | ex-dividend payment date |
Travis Perkins PLC | dividend payment date |
UIL Ltd | ex-dividend payment date |
Friday 10 May | |
AIB Group PLC | dividend payment date |
Alpha Group International PLC | dividend payment date |
Antofagasta PLC | dividend payment date |
Hammerson PLC | dividend payment date |
Hunting PLC | dividend payment date |
International Personal Finance PLC | dividend payment date |
Invesco Select Trust Global Equity Income PLC | dividend payment date |
Invesco Select Trust UK Equity PLC | dividend payment date |
Johnson Service Group PLC | dividend payment date |
Kerry Group PLC | dividend payment date |
Moneysupermarket.com Group PLC | dividend payment date |
Schroder Asian Total Return Inv Co PLC | dividend payment date |
Schroder European Real Estate Investments Trust PLC | dividend payment date |
Schroder Oriental Income Fund Ltd | dividend payment date |
Serco Group PLC | dividend payment date |
Smurfit Kappa Group PLC | dividend payment date |
Somero Enterprises Inc | special dividend payment date |
Taylor Wimpey PLC | dividend payment date |
Tufton Oceanic Assets Ltd | dividend payment date |
VPC Specialty Lending Investments PLC | dividend payment date |
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