Stock markets in the US and Europe were propelled higher by a bevy of heartening US economic reports, with electronics retailer Dixons (DXNS.L) one of the biggest risers in London amid the demise of competitor Comet.
The US manufacturing sector expanded for the second month in a row in October, the ISM survey showed, ending six months of stagnation.
Meanwhile, consumer confidence is on the rise – the Conference Board survey now stands at its highest level since February 2008 – and the ADP employment report exceeded market expectation.
US markets subsequently opened on a high, with the Dow up 1.1% at 13,245. European markets also made a run for it, with London’s FTSE 100 up 1.4% to 5,866. The main test of US economic strength, and potential market mover, comes tomorrow afternoon though when the non-farm payrolls report is published.
Lloyds continued to move higher after this morning’s numbers (see update below), while BG Group slumped to another daily loss, down nearly 4% at 1,101p as sellers maintained the upper hand over opportunistic buyers.
Dixons made strong gains on the FTSE 250, 12.3% higher to 23p after troubled competitor Comet confirmed that it will go into administration.
Seymour Pierce this morning said Dixons would ‘certainly be a beneficiary’ of Comet’s failure. The broker reiterated its ‘buy’ recommendation on the shares, though it added that in the short term Comet’s administrators would sell Comet’s stock off on the cheap.
9:04: Loss-making Lloyds among top FTSE gainersLloyds Banking Group (LLOY.L) was among the biggest gainers on a rising FTSE 100 in Thursday morning trade, as even a £144 million quarterly loss and an extra £1 billion of costs for insurance mis-selling were better than City forecasts.
António Horta-Osório, chief executive of the 40% state-owned banking group, said a provision of £2.075 billion relating to payment protection insurance (PPI) – part of wider total costs of £5.3 billion – was the primary driver of the group’s statutory loss of £583 million for the first nine months of 2012.
The group did, however, report progress in cutting costs and strengthening its balance sheet, while maintaining its guidance for investors, helping the shares 3% higher to 41.8p.
Gary Greenwood of Shore Capital said: ‘With its focus on retail and commercial banking and lack of material exposure to investment banking, where there is the greatest regulatory uncertainty, Lloyds remains our preferred play amongst the domestic UK banks.’
BT Group (BT.L) was the top riser, up 5% to 223p, after the telecoms company announced a 15% increase in the interim dividend alongside in-line profits for the first half of the year. Revenues were down, however, and the group cut its revenue guidance for this year.
‘Shares were weak into these results and current levels represent a good buying opportunity,’ commented Lawrence Sugarman of Liberum.
Shell (RDSb.L) also featured among the FTSE 100 winners, despite reporting a 15% decline in third quarter 2012 earnings (on a current cost of supplies basis) to $6.1 billion. Shares in the oil major were 0.6% higher at 2,206p. Investec upped its target price for the shares, to 1936p with a 'hold' recommendation, with analyst Stuart Joyner saying 'Shell is continuing to generate substantial cash flows and we expect the priority to be re-investment but the company could afford a more generous dividend if it chose to.'
In the losers’ column, BG Group (BG.L) dropped lower again after yesterday’s precipitous fall. Today the shares are down a further 4% to 1,100p after a string of target price cuts from brokers including Goldman Sachs, Exane BNP Paribas and JP Morgan.
Barclays (BARC.L) managed to lose just 0.1% of its share price, down to 227p, after the US Federal Energy Regulatory Commission last night served the bank with a notice ordering it to pay $470 million (£293 million) in penalties for alleged manipulation of US energy markets between 2006 and 2008.
The wider FTSE 100 managed gains of 0.2% to hit 5,795, not enough to make up for yesterday's losses. Wall Street closed flat overnight, having reopened after Hurricane Sandy caused the longest weather-related shutdown since 1888.
Asian markets were mixed, with support from a report showing China’s manufacturing output in October improved slightly and jumped above 50 for the first time since July.