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LONDON (Alliance News) - London's main stock indices closed relatively flat Wednesday, with the blue chip FTSE 100 and AIM All-Share closing slightly up, and the FTSE 250 ending fractionally down after markets reacted to the news that the US President Barack Obama may authorise military intervention in Syria with or without the support of the US senate.
The FTSE 100 was down for the majority of the day, reaching a daily low of 6,423.51, before closing marginally in positive territory, up 0.1%, at 6,474.74. The FTSE 250, similarly, fell sharply Wednesday morning before staging a resurgence, although still closing down 0.07%, at 14,851.53. Conversely, the AIM All-Share performed well throughout the day, recording a new high for 2013, at 761.4. The index did experience a slight fall mid afternoon, following Obama's speech justifying military action against Syria for the alleged use of chemical weapons, but ultimately closed up 0.1%, at 760.62.
In the UK equity sectors, mobile telecommunications are the days biggest winners. In a volatile market following the huge USD130 billion sale of its 45% stake in its joint-venture with Verizon, Vodafone shares pushed higher, up 1.7%, or 3.4652 pence, closing at 205.9652p, after being the biggest faller on Tuesday.
Conversely, the airline sector was hit hard. Following the US Senate's foreign relations committee agreeing on the wording of a resolution that would authorize limited use of military force against the Syrian government over the use of chemical weapons, investor confidence in heavy fuel utilizing companies drifted.
Contributing to a decrease in support for airline companies was a profit warning issued by Ryanair, which said fares and yields are under pressure on routes including the UK, Spain and Scandinavia.
As analysts suggest Ryanair is the airline best able to handle fuel-price rises, the Irish company's profit warning is being taken as a bad sign for the sector, with easyJet, TUI Travel and International Consolidated Airlines Group leading the FTSE 100 fallers. EasyJet closed down 6.7% at 1,194.2378p, TUI Travel closed down 4% at 331.7187p, and International Consolidated Airlines fell 4.2% to 282.35p.
A slew of service-sector PMI readings began overnight with China, where numbers showed that the sector is growing at the fastest rate since March. Italian services PMI showed a slight increase in August to 48.8 points, from 48.7 in July, but against a higher forecast of 49.9. The comparable numbers for France showed an increase to 48.9 from 48.6 against 47.7 forecast. Germany also beat expectations, coming in at 52.8, up from 51.3 and against 52.4 forecast, while numbers for the whole Eurozone as a whole rose to 50.7 from 49.8, slightly lower than the forecast 51.0.
Eurozone retail sales grew 0.1% on the month in July, slightly missing forecasts for 0.2% growth, while revised second quarter Eurozone GDP has come in unchanged at +0.3%, confirming the single currency area is out of recession.
The pound, meanwhile was lifted by the UK services PMI, which advanced to 60.5 in August from 60.2 in July, with economists having forecast 59.7. This is the strongest improvement in the index in more than six-and-half years and is the latest a now long list of strong macro readings for the UK.
Despite the trade balance numbers from the US showing that the deficit has expanded 13.3% in July to USD39.1 billion, against a forecast of USD38.6 billion, all the mainUS indices were higher at the close of UK markets. The Nasdaq is the biggest gainer, up 0.8% at 3,642.07, whilst the S&P is up 0.7% at 1,651.01, and the Dow up 0.6% at 14,917.01.
Wednesday evening sees the Fed Beige Book at 1900 BST, which will give the Federal Open Market Committee guidance on current economic conditions ahead of its next meeting.
Thursday brings French unemployment figues at 0630 BST, as well as the Bank of England interest rate decision at 1200 BST and the European Central Bank interest rate decision at 1245 BST. Later in the day is the ECB Monetary policy statement at 1330 BST, with US jobless claims at the same time. US Non-Manufacturing PMI figures will be released at 1500 BST.
By James Kemp; jameskemp@alliancenews.com
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