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FTSE heads for 6,300 as bulls take charge
Investors cast caution to the wind and pushed the FTSE 100 1% higher on signs of a global recovery. The pound took a beating, however.
(Update) The FTSE 100 surged in afternoon trading as Wall Street opened strongly in response to a raft of positive US data, strengthening investors' belief that the global economy is headed for recovery.
The UK blue chip index threw off earlier jitters caused by the heavy fall in Apple shares in the US last night to race 1% higher at 6,265, a gain of 67 points. So far in January the FTSE 100 has soared more than 6% or 357 points as the bulls have gained control. Today this prompted Investec fund manager Alastair Mundy to warn some investors were ignoring the risks.
In the US the Dow Jones industrial average climbed 0.5% or 77 points to 13,856 while the S&P 500 index put on 0.3% or five points at 1,499 in response to better-than-expected employment and manufacturing figures.
Trio of good news
New jobless claims in the past week came in at 330,000, down 5,000 on the previous week and less than the 355,000 expected by economists polled by Reuters.
Meanwhile the early reading of the Markit manufacturing Purchasing Managers Index (PMI) hit 56.1, up from 54 and smashing forecasts of 53. This followed positive manufacturing PMIs in Europe and China earlier in the day. In PMI scores 50 is the dividing point between growth and contraction.
Completing a trio of good data the Conference Board said its leading economic index had risen 0.5% to 93.9 last month.
In London, leading shares extended their gains after analyst upgrades and raised target prices. Chemicals specialist Croda (CRDA.L) raced 5.6% or 72p higher to £13.46 while British Airways owner IAG (ICAG.L) flew 4.8% or 10p to 218p.
Portable power plant provider Aggreko (AGGK.L) was the biggest FTSE 100 faller, down 2.75% or 50p at £17.71.
Pound hit by GDP fears
On currency markets the pound fell sharply ahead of tomorrow's fourth quarter GDP figures. Despite the increasing euphoria around global prospects, some think the figures could be bad, showing the UK economy may have shrunk by more than the 0.1% consensus forecast gathered by Reuters.
Against the dollar sterling fell 0.3% to $1.5790 and against the euro it tumbled 0.9% to 84.8p a euro.
Not surprisingly, with investors rushing into shares, gold fell 0.6% to just over $1,675 an ounce with government bonds in the US, UK and Germany also weaker.
Apple plunge fails to stop buoyant FTSE
The FTSE 100 moved 14 points or 0.2% higher at 6,212 as chip designer and Apple supplier ARM Holdings (ARM.L) tumbled in early trading in response to the US consumer tech giant’s latest quarterly figures, but recovered to trade 6.5p or 0.7% lower at 843p.
Although Apple sold a record 47.8 million iPhones in the last quarter of 2012, an increase of 29%, this nonetheless disappointed expectations on Wall Street that it would break through 50 million.
And, while quarterly revenues grew 18% to $54.5 billion that came below expectations that turnover would hit $54.7 billion, marking the third consecutive quarter that Apple has missed forecasts and suggesting that its remarkable growth may be waning.
Europe turns a corner
Nevertheless, the bigger picture continues to look brighter with Chris Williamson, economist at financial data company Markit saying Europe had passed a 'turning point' in its recovery. The latest Markit Flash Composite Eurozone Purchasing Managers' Index (PMI) jumped to 48.2 this month, way ahead of forecasts it would hit 47.5 after the 47 reading in December.
Although the PMI has been stuck below 50 - the level that separates growth from contraction - for nearly a year and a half, Williamson said the data showed an improvement.
'We shouldn't get too gloomy about those numbers. There is a turning point that took place towards the end of last year and the beginning of this year so things are picking up. Any downturn is looking likely to end in the first half,' said Williamson.
There was also good news from China, where the HSBC flash PMI rose to 51.9, its highest reading in two years.
The Eurofirst 300 was largely unchanged at 1,168 but the euro was slightly firmer at 84.15p to the pound and $1.3324 against the dollar. The pound softened to $1.5832 against the dollar.
The big story on currency markets remains the yen. Japan's currency rebounded another 1% to 89.57 yen to the dollar in response to this week's intervention by the Bank of Japan which left markets unconvinced of its determiniation to lower the currency.
Libor probe hits ICAP shares
In London ICAP (IAP.L) tumbled 17p or 5.2% to 310p as the Financial Times revealed the inter-dealer broker is under investigation by the Financial Services Authority in connection with Libor rate fixing. This makes it the first non-bank to be implicated in the scandal.
Croda (CRDA.L) led the FTSE 100 with a 2.3% or 54p leap to £24.12 in what looks to be a delayed response by investors in the specialist chemicals group to Berenberg upping its target price for the shares yestefday to £27 from £26. In a note to clients Berenberg analysts said the company do better than expected in its fourth quarter and recommended the shares as a buy.
Severn Trent (SVT.L) advanced 20p or 1.25% to £16.24 after BofA Merrill upgraded the water group to ‘neutral’ from ‘underperform’. United Utilities (UU.L) also added 5p or 0.7% to 723p as the broker slapped a similar upgrade on the stock.
Easyjet (EZJ.L) jumped 32p or 3.7% higher to 887p after the budget airline reported a 9.2% rise in first quarter revenues. Its shares have doubled in the past year, valuing it at £3.5 billion.
Firstgroup (FGP.L) moved 1.7p or 0.9% higher to 193.7p as third quarter results from the transport operator met expectations despite the hit its US business took from Hurricane Sandy.
Ladbrokes (LAD.L) advanced 6p or 3% to 205p on buying the Betdaw betting exchange for €30 million.
In financials St James' Place (SJP.L) gained 6.8p or 1.5% to 463.4p on a 16% increase in sales.
Shares in the London Stock Exchange (LSE.L) dipped 4.4p to £11.78 after beating forecasts with a small rise in quarterly income to £208.9 million.
Paypoint (PAYP.L) also shed 9p to 851p after the cash machines operator's trading statement.
Chemring (CHG.L) rose 7p or 2.4% to 289.3p after the defence group's raised full-year revenues by 2% in difficult market conditions.
Punch Taverns (PUB.L) slid 6% or 0.7p to 10.5p after chief executive Roger Whiteside jumped ship to run bakery group Greggs (GRG.L) where current boss Ken McMeikan is leaving in March. Its shares firmed 6p to 481p.
See our FTSE data pages for the day's other risers and fallers
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- ARM Holdings PLC (ARM.L)
- ICAP PLC (IAP.L)
- Croda International PLC (CRDA.L)
- United Utilities Group PLC (UU.L)
- Severn Trent PLC (SVT.L)
- easyJet plc (EZJ.L)
- Firstgroup PLC (FGP.L)
- Ladbrokes PLC (LAD.L)
- St. James's Place PLC (SJP.L)
- London Stock Exchange Group PLC (LSE.L)
- PayPoint PLC (PAYP.L)
- Chemring Group PLC (CHG.L)
- Punch Taverns PLC (PUB.L)
- Greggs PLC (GRG.L)
- Aggreko PLC (AGGK.L)
- International Consolidated Airlines Group SA (ICAG.L)
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