Market Blog: Standard Chartered tops tepid FTSE

• Wall Street inches ahead
• Standard Chartered shares rise as bank fights back
• Falling Chinese inflation boosts stimulus hopes; markets start slightly higher
• Randgold production rises despite Mali coup, shares rise
• Standard Chartered shares continue to claw back as bank seeks legal advice

17.00: Britain’s FTSE 100 index has inched ahead as Standard Chartered (STAN.L) rises to the top of the index for a second day running.

The FTSE 100 added 0.1%, or five points, to 5,852 and the Mid-250 index took on 0.24%, or 28 points, to 11,464.

Standard Chartered added 47.5p, or 3.6%, to £13.63, as the beleaguered bank continues to recover from damning allegations from the New York State financial regulator of doing business for the Iranian government.

European stock markets gave a mixed performance: Germany’s DAX index shed 0.02% to 6,965, France's CAC 40 index added 0.54% to 3,457, and the FTSEurofirst 300 index of top European shares gained 0.37% to 1,100.

Wall Street inches ahead

15.30: On Wall Street markets are getting off to a quiet start as low trading volumes see its leading indices tick up.  

The Dow Jones Industrial Average inched ahead 0.14% to 13,193, the Standard & Poor's 500 index was flat at 1,402, and the Nasdaq Composite index took on 0.33% to 3,021.

Weekly unemployment claims surprised, in a similar fashion to last week’s non-farm payrolls, by beating analyst expectations as 361,000 people filed for unemployment insurance for the first time last week rather than the 371,000 expected.

However, investors are holding out for some big stimulus action from European and US monetary authorities, as economic growth continues to disappoint.

Sterling shed 0.15% against the dollar to $1.56, and added 0.36% against the euro to €1.27. Gold prices also remain flat at $1,614 an ounce.

UK trade deficit widens

09.49: The UK’s trade deficit has widened sharply, to £4.3 billion in June, as the export-led recovery envisaged by the government remains elusive. That's the worst trade position since records began in 1997.

This disappointing figure compares with a deficit of £2.7 billion in May, according to the figures from the Office for National Statistics. Exports were down 3.3% in the second quarter of the year, while the volume of imports fell 0.5%.

Once again, as with other bad economic news, the additional bank holiday for the Queen's Diamond Jubilee was partly to blame, according to the ONS. Chris Williamson, economist at Markit commented: 'The fall could perhaps be in part blamed on the disruption to shipments caused by extra holidays for the Queen's Jubilee, but there is clearly an underlying trend of worrying weakness in overseas demand.'

The figures are highly volatile on a monthly basis and the ONS often revises them.

Standard Chartered shares creep higher

08.58: Standard Chartered (STAN.L) is fighting back – and its shares are responding.

According to a Financial Times report today:

‘Standard Chartered has sought advice about whether it can pursue a legal action against the US regulator that on Monday accused the British bank of being a rogue institution which had funded $250 billion of Iranian sanctions breaches.

‘The bank’s legal advisers believe “there is a case” for claiming reputational damage, according to two people close to the situation, although StanChart is conscious of the delicacy of taking an aggressive stance towards its regulators.’

Many analysts also seem to have changed their tune. After initial downgrades, several have now said investors should stand firm and hold onto the shares. 

 

Shares are rising for their second straight day, up 3.7% this morning at £13.65, though still way off the £16.00p level before their precipitous fall on the news of the US allegations into Iran money ‘scheming’.

Randgold production rises despite Mali coup

08.48: Shares in west and central Africa focused gold miner Randgold Resources (RRS.L) are near the top of the FTSE 100 today after the group reported a 10% rise in second quarter profits to $141.9 million.

Shares in the company took a tumble in March when news of a coup broke in Mali – home to three of four of Randgold's operational mines – but have been rising since mid-May even as the country remains in crisis.

Chief executive Mark Bristow said in the company’s statement this morning: ‘Despite the ongoing political uncertainty in Mali, the operation of the mines has been unaffected, and the management team has done an excellent job in delivering an all-round record quarter. The company continues to monitor the political situation in the country.’

Analysts at Nomura, who have a ‘reduce’ rating on Randgold shares, said the company’s results had been in line with expectations, with higher production than expected at 210,534 ounces, but slightly higher cash costs.

Falling Chinese inflation boosts stimulus hopes

08.02: Expectations have grown for more market-boosting policy action from the Chinese authorities after data showed inflation has fallen to a 30-month low and economic activity remains weak by the fast-growing economy's standards.

China's CPI inflation fell to 1.8% in July from 2.2% in June, roughly in line with market expectations.

‘These readings should be market positive because falling inflation should provide more room for policy easing/stimulus and falling raw material prices benefit China which is the largest importer of commodities,’ said Ting Lu of Bank of America Merrill Lynch.

A string of other economic data for China published today suggested that the economy continues to struggle – relatively – and recent stimulus measures may not have had the desired effects. Figures on industrial production, retail sales and fixed asset investment were all a little bit weaker than expected by economists, who reckon China's economy should have hit a low.

Alistair Thornton of IHS Global Insight said the authorities were struggling to stimulate growth: ‘New projects have been approved, local governments have been given the all-clear to re-engage with financing platforms, and banks have been leant on to extend additional credit. By all rights, this should be feeding into heightened investment activity. It isn’t.’

A cut in banks' reserve requirements is thought most likely, rather than another interest rate cuts after surprise moves in June and July.

Li-Gang Liu of ANZ bank (which produced the chart above) expects immediate action: 'We believe that the PBoC will cut the RRR, as early as tonight, to stabilize the economy. A faster implementation of fiscal policies will also help the economy to regain momentum.'

European markets started higher in response to the data. The FTSE started up 0.1% at 5,852.