FTSE100: This morning’s risers and fallers
The inflation report, due out at 10:30 this morning, will be closely watched given recent increasing pressure on the BoE to adjust its strategy of linking monetary policy to the jobless rate.
This follows a faster-than-expected fall in unemployment towards the 7% threshold at which the Bank said it would reassess its policy. Inflation, meanwhile, remains roughly in line with the BoE’s target of 2%.
Chief economist Simon Smith from FxPro said that “the Bank is going to revise and soften its forward guidance policy, rather than prepare the market for an imminent rate hike”.
The FTSE 100 was little changed from Tuesday’s closing price of 6,672.66 in early trading; this was the index’s highest finish since January 23rd.
Stocks rose strongly yesterday after new Federal Reserve Chair Janet Yellen expressed her commitment to continuing to scale back stimulus in “measured steps” after a “broad improvement” in the labour market. However, she added that while the unemployment rate has fallen by nearly a percentage point since the middle of last year, “the recovery in the labour market is far from complete”.
Sentiment was also lifted this morning by a higher-than-expected trade surplus in China after exports rose by more than expected in January. Export growth accelerated to 10.6% from 4.3% previously, while import growth rose to 10% from 8.3%. This resulted in a trade balance of $31.86bn, surprising analysts who had expected a slight decline from the $25.64bn surplus registered in December.
“Although a better-than-expected figure would be warmly welcomed, the sharp rise could be due to distortions from the Lunar New Year holidays,” warned Lee Mumford, Financial Sales Trader at Spreadex.
WM Morrison founders considering private-equity buyout
WM Morrison surged this morning after Bloomberg said that its founding family is considering taking the supermarket group private. The Morrison family, who are thought to hold around 9-10% of the UK grocer, are said to have spoken to a number of private-equity firms to gauge their interest. Bloomberg said that a potential buyout of WM Morrison, valued at a market capitalisation of around £5.7bn, would be for at least £7bn.
Supermarket peers Sainsbury and Tesco were also performing well this morning.
Mining stocks were also in demand today after the better-than-expected data from top metals consumer China. Glencore Xstrata, Anglo American, Rio Tinto and BHP Billiton were all advancing.
Precious metals producer Fresnillo was also higher, extending gains made yesterday afternoon after on hopes that it is close to having a ban on an explosives permit in Mexico lifted.
Sector peer African Barrick Gold, however, sunk this morning after cutting its dividend and swinging to an annual loss for 2013, reflecting impairment charges relating to the impact of lower gold prices and changes to mine plans.
Africa-focused explorer Tullow Oil was flat after saying that while revenues rose in 2013 profits fell in the face of a £200m increase in exploration write-offs. Oil peers Shells and BP were trading lower early on.
Consumer products giant Reckitt Benckiser said it exceeded its targets after “another strong year” in 2013, but warned that markets conditions have become more challenging. Shares edge higher early on.
Data centre services group Telecity saw its shares dive as much as 12% in early trading after predicting 2014 revenue would be below that forecast by analysts following a good set of results for 2013.
FTSE 100 – Risers
Morrison (Wm) Supermarkets (MRW) 245.20p +3.37%
Bunzl (BNZL) 1,429.00p +2.73%
Standard Chartered (STAN) 1,298.00p +2.20%
Anglo American (AAL) 1,545.50p +1.28%
Reckitt Benckiser Group (RB.) 4,887.00p +1.24%
Marks & Spencer Group (MKS) 491.30p +1.17%
BAE Systems (BA.) 440.60p +1.08%
Mondi (MNDI) 988.50p +1.07%
Old Mutual (OML) 182.90p +0.99%
Schroders (SDR) 2,592.00p +0.93%
FTSE 100 – Fallers
Persimmon (PSN) 1,409.00p -1.74%
Barclays (BARC) 261.00p -1.40%
Royal Dutch Shell ‘A’ (RDSA) 2,115.50p -1.31%
Sage Group (SGE) 422.50p -1.31%
Royal Dutch Shell ‘B’ (RDSB) 2,246.00p -1.27%
ARM Holdings (ARM) 927.00p -1.07%
Randgold Resources Ltd. (RRS) 4,664.00p -0.87%
BP (BP.) 488.20p -0.72%
G4S (GFS) 232.70p -0.64%
Carnival (CCL) 2,533.00p -0.63%