19th Oct 2016 17:08
LONDON (Alliance News) - Stocks in London ended higher on Wednesday, having traded lower through most of the session, tracking oil prices higher following data showing a bigger-than-expected fall in US crude stockpiles.
Before the US stockpiles data were released in the London afternoon, upbeat UK unemployment data put out in the morning helped limit the losses in London, while the market also digested strong Chinese inflation data overnight.
Among individual stocks, Travis Perkins led the FTSE 100 fallers after the builders' merchant unveiled plans to close stores, citing uncertainty about UK customer demand. Meanwhile, FTSE 250-listed Laird shares almost lost half their value, after the wireless components company issued a profit warning.
The FTSE 100 closed up 0.3%, or 21.86 points, at 7,021.92. The blue-chip index added to the gains seen on Tuesday, when it added 0.8% as UK consumer inflation rose to a near two-year high.
The mid-cap FTSE 250 index ended 0.3% higher, or 46.12 points, at 18,040.53, while the AIM All-Share ended up 0.4%, or 3.23 points, at 826.54.
The BATS UK 100 index ended up 0.4% at 11,877.42, the BATS 250 closed 0.2% higher at 16,389.91, but the BATS Small Companies closed 0.2% lower at 11,031.49.
Data from the US Energy Information Administration showed that crude stockpiles in the US fell in the week ended October 14. The report said US crude oil inventories dropped by 5.2 million barrels last week, with economists expecting an increase of 2.7 million barrels.
This supported Brent oil, with the North Sea benchmark quoted at USD52.93 a barrel at the London equities close, compared to USD51.40 a barrel on Tuesday.
Gold was higher as well at the London equities close at USD1,271.70 an ounce, against USD1,260.90 an ounce on Tuesday.
On Wall Street at the London close, the Dow Jones Industrial Average was up 0.4%, the S&P 500 was 0.3% higher, and the Nasdaq Composite was up 0.1%. The US earnings season continued with investment bank Morgan Stanley releasing third-quarter results before the Wall Street open, beating analysts' expectations for both earnings per share and revenue.
After the New York equities close, the highlights are third-quarter updates from financial services firm American Express and e-commerce company eBay.
In mainland Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt ended up 0.3% and 0.1%, respectively. The euro stood at USD1.0965 at the European equities close, hardly changed from USD1.0984 at the close Tuesday.
The UK's ILO jobless rate came in at 4.9% in the three months ended August, unchanged from the three months to July, data from the Office for National Statistics showed. The figure matched consensus estimates.
The ONS said the number of people claiming unemployment benefits grew by 700 in September from August, below economists' forecast for an increase of 3,200. Average earnings including bonuses climbed 2.3% in August from a year ago, in line with expectations.
"Following the explosive reaction to yesterday's inflation data the jobs update faced a tough task in producing something as noteworthy," said Spreadex analyst Connor Campbell.
There wasn't a big reaction in the pound, though sterling was able to retain some of the gains from Tuesday, quoted at USD1.2296 at the equities close, compared to USD1.2314 at the close on Tuesday. At the close on Monday, sterling stood at USD1.2186.
On the economic front, the day started with strong GDP data from China, however, this failed to inspire enough confidence among investors.
China's economy grew 6.7% year-on-year in the third quarter of 2016, identical to the first and second quarters and falling comfortably in-line with the government's gross domestic product growth target for 2016 of 6.5% to 7.0%. The growth in the third quarter also matched economists' estimates.
China's retail sales grew 10.7% from a year earlier in September, a tad better than the anticipated 10.6% rise. Fixed asset investment improved, while industrial output growth slowed unexpectedly in the month.
The Shanghai Composite closed flat and the Hang Seng in Hong Kong edged down 0.4%. In Japan, the Nikkei 225 index in Tokyo ended up 0.2%.
Back in London, Travis Perkins fell 5.9%, after it noted the combination of weak demand, changing customer buying behaviour, and the impact of previous government boiler replacement incentive schemes had meant the plumbing, heating and bathroom markets had "been challenging".
Plumbing peer and fellow FTSE constituent Wolseley ended 1.2% lower, while mid-cap peers SIG, Grafton Group, and Ibstock fell 3.3%, 1.9%, and 0.7%, respectively.
FTSE 100-listed Reckitt Benckiser dropped 2.8%. Analysts called the consumer health and hygiene products giant's third-quarter update "weak" and "disappointing", despite Reckitt saying net revenue in the third quarter grew by 17% year-on-year to GBP2.56 billion. Like-for-like sales rose by 2%, but fell short of consensus expectations of a 2.8% increase, according to Liberum.
BT Group fell 1.3%. Both Deutsche Bank and UBS cut their price targets for the telecommunications giant, with Deutsche saying the stock is "not cheap enough yet" given the risks it faces, and UBS citing the company's widening pension deficit.
Burberry Group rose 2.8%. The fashion house's shares rebounded after closing down 7.2% on Tuesday, when Burberry had reported lacklustre underlying sales for its first half.
Meanwhile, Barclays ended 2.5% higher. The lender was upgraded to Buy from Hold by Investec ahead of its third quarter results on October 27.
FTSE 250 constituent Laird closed down 47%. The wireless components maker said an anticipated improvement in trading in the second half of 2016 has not materialised, and its underlying pretax profit for the full year is set to fall as a result. It said that, following a disappointing first half of 2016, it had expected a better second half, particularly in its Performance Materials unit.
At the other end of the mid-cap index, Computacenter finished 6.7% higher after the IT infrastructure services provider was upgraded to Buy from Neutral by UBS.
In the UK corporate calendar on Thursday, there are trading statements from London Stock Exchange Group, Segro, Rathbone Brothers, International Personal Finance, and Photo-Me International. Lombard Risk Management releases half-year results.
In the economic calendar, Germany's producer price index is at 0700 BST, the eurozone's current account is at 0900 BST, while UK retail sales are at 0930 BST. In the US, initial and continuing jobless claims are at 1330 BST, at the same time as the Philadelphia Fed manufacturing survey. The EIA natural gas storage change data are at 1530 BST.
Also on Thursday, the European Central Bank's Governing Council announces its policy decision at 1245 BST, followed by a press conference with President Mario Draghi in Frankfurt at 1330 BST.
The ECB is not expected to announce any new policy measures in its decision, but analysts played down tapering concerns and expect the bank to extend its quantitative easing programme at the next meeting in December.
By Daniel Ruiz; [email protected]
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