LONDON (Alliance News) - Stocks in London were higher Wednesday midday, led by housebuilders, ahead of the UK Autumn Statement and Comprehensive Spending Review announcement by the UK Chancellor George Osborne starting at 1230 GMT.
The FTSE 100 index was up 0.9% at 6,331.30 points, while the FTSE 250 was gaining 0.9% at 17,101.86 and the AIM All-Share was up 0.2% at 729.43. In Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt both were up 1.4%.
In New York, shares were called for a positive open. The Dow 30 index, the S&P 500 and the Nasdaq 100 all were pointed up 0.2%.
In a blast of US data releases before the Thanksgiving Day holiday on Thursday and a half day for markets on Friday, personal income, spending and consumption expenditure price data are at 1330 GMT alongside durable goods data.
Lloyds Bank said the focus will be in the Personal Consumption Expenditure Price Index, which the bank said is "the US Federal Reserve's preferred measure of inflation". The bank said it is expected to tick up to 1.4% on the 'core' rate in October, "helping to provide the Fed with 'reasonable confidence' that inflation is returning to its target."
Also in the US economic calendar, the Federal Housing Finance Agency's housing price index is at 1400 GMT, flash Markit services and composite purchasing managers' index readings are at 1445 GMT, new home sales at 1500 GMT, and the Energy Information Administration's crude oil stocks at 1530 BST.
In London, the focus for the Autumn Statement will be whether Osborne will stick to his budget surplus target, following figures on the UK's public finances coming in below expectations last week and amid a series of defence spending pledges by the government.
Osborne has tabled a plan to eliminate the deficit and have the UK in a budget surplus of around GBP10.0 billion by 2020. The spending cuts required to get there will be announced Wednesday afternoon as part of the government's Comprehensive Spending Review, which will outline the spending plans for the next five years.
UBS analyst David Tinsley, however, said "near-term UK public finances have deteriorated a little, and it would not be surprising to see this year's deficit revised up by GBP5 billion to GBP10 billion", while he expects future years to remain "broadly untouched".
In the Autumn Statement itself, the Financial Times and other media reported that Osborne will announce plans to build more than 400,000 new homes across England, in a GBP6.9 billion programme to help people buy their own homes.
This was pushing the shares of housebuilders higher, with Persimmon up 6.3%, Taylor Wimpey up 6.8%, Barratt Developments up 5.5% and Berkeley Group Holdings up 4.9%. In the FTSE 250, Bellway was up 6.2% and Crest Nicholson was up 4.8%.
"The greater uncertainty lies in which sectors are likely to suffer as the chancellor tries to balance the books," warned IG market analyst Alastair McCaig.
In the meantime, Whitbread, owner of Costa Coffee and Premier Inn, was up 3.1% after being initiated at Buy by HSBC, while miner Anglo American was the worst blue-chip performer, down 7.8%, after being downgraded to Reduce from Hold, also by HSBC. Goldman Sachs cut Anglo's price target to 430 pence from 450p. The stock stood at 416.60p at midday.
Shire was down 1.1% after Reuters reported late Tuesday that the Irish drugmaker is preparing to make a new takeover offer for US peer Baxalta, citing a source with "direct knowledge of the situation". This comes almost four months after Baxalta rejected a previous unsolicited GBP20.0 billion offer Shire made, which it argued significantly undervalued the company.
Shares in Thomas Cook Group were at the top of the FTSE 250, up 9.0%, after it said current trading is encouraging, as it reported a swing to a profit in its recently-ended financial year, with strong demand for some of its holidays offsetting disruption caused by the terrorist attack in Tunisia in June.
Thomas Cook said demand for holidays to own-brand hotels and other new products increased, despite disruption to the business from the terrorist attack on a beach in Tunisia in which 38 holidaymakers died.
Plastic packaging company RPC Group declared an 18% improvement to its interim dividend following a rise in pretax profit in the first half, driven by much higher revenue derived from organic growth and acquisitions.
RPC Group, which makes a range of plastic containers and packaging products, said its pretax profit for the six months to the end of September was GBP40.5 million, up from GBP34.9 million a year earlier. Its shares traded up 3.5%.
Meanwhile, recruiters Hays and Michael Page International were down 2.2% and 2.1%, respectively, after RBC Capital downgraded them to Sector Perform from Outperform.
In AIM, Weatherly International was down 27%. The copper cathode miner said its largest shareholder and lender has agreed to defer a loan instalment repayment, as its Tschudi mine in Namibia is not generating enough operating cash to service its debt facility.
SeaEnergy was off 30%, the worst performing in the AIM All-Share index. The offshore energy services company said it expects a "significant loss" for 2015, hit by sustained low oil prices, and said it expects to complete its exit from ship management by the end of the year.
By Daniel Ruiz; danielruiz@alliancenews.com
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8 Aug 2014 06:56
