10th Apr 2015 09:51
LONDON (Alliance News) - The FTSE 100 trades higher Friday mid-morning led by drugmaker Shire, while the UK industrial production data rose by less-than-expected in February and the manufacturing production data came in line with economists expectations.
The FTSE 100 is trading up 0.2% at 7,029.45, not too far from its record high of 7,065.08 reached on March 24. Meanwhile, the FTSE 250 is up 0.4% at 17,788.51, while the AIM All-Share is flat at 732.40.
European indices are trading higher, with the CAC 40 in Paris up 0.2% and the DAX 30 in Frankfurt up 0.9%.
UK industrial production expanded for the first time in three months in February, the Office for National Statistics said Friday. Industrial output rose 0.1% on a monthly basis in February, offsetting January's 0.1% fall. But the rate was weaker than a 0.3% rise forecast by economists. Year-on-year, growth in industrial production eased by more than expected to 0.1% from 1.2%. It was forecast to rise 0.3% in February.
On a month-on-month basis, manufacturing output advanced 0.4% reversing a 0.6% drop. The monthly increase came in line with expectations. Year-on-year, manufacturing output growth slowed to 1.1% from 1.9%, with economists expecting 1.3% annual growth.
Industrial production includes mining and utilities, in addition to manufacturing.
The pound dropped following the release of the industrial and manufacturing data, and hasn't recovered yet from Thursday's losses after data from the Office for National Statistics showed the UK trade deficit in goods widened by more than expected in February. The pound is suffering against the dollar, which shows no sign of slowing its gains. Cable is quoted at USD1.4641 Friday mid-morning.
"Since the Federal Open Meeting Committee minutes were released on Wednesday, what had been a consolidation is turning back into a trend of dollar strength once more...A spike higher in [US] Treasury yields yesterday also backs this assertion," says Hantec Markets analyst Richard Perry.
The minutes of the two-day FOMC meeting, held in March, showed that several participants determined that the economic data and outlook were likely to warrant the beginning of the process of raising US interest rates in June. Others said conditions would not be appropriate to begin raising rates until later in the year due to the effects lower energy prices and the dollar's appreciation have on inflation.
"Equity markets have been mixed recently, with Wall Street being held back by concerns over how the strength of the dollar will impact on earnings season that is just going, whilst also a fear of what Fed tightening might also do," writes Perry.
US futures point to a slightly lower opening, with the DJIA, the S&P 500 and the Nasdaq 100 down 0.1%. Still in the US economic calendar, import and export price indices are at scheduled for 1330 BST.
UK NIESR GDP estimate is due to be released at 1500 BST. The data "should give us some indication of how well the economic recovery has continued into this year ahead of the first official release in a few weeks," says Oanda analyst Craig Erlam. "We have been seeing a small slowdown in growth over the last couple of quarters although not enough to be particularly concerned about."
"The only question is, will the numbers seen in the first quarter have any impact on the upcoming election given that the Conservatives have placed so much emphasis on the economic recovery. A poor showing in the first quarter would be very unwelcome in the weeks leading up to the closest fought election in years," writes Erlam.
In Asia, Chinese shares hit a fresh seven-year high as tepid inflation data bolstered the case for more stimulus measures. China's annual consumer inflation stayed flat at 1.4% in March, official data showed, coming in well below Beijing's target of around 3% for this year. The benchmark Shanghai Composite index climbed 1.9% to close above the 4,000 level, its highest level since 2008.
Hong Kong's Hang Seng index closed up 1.2%, at record levels it also hasn't seen since 2008. Meanwhile, Japan's Nikkei index breached the 20,000 level for the first time in 15 years on hopes for larger shareholder returns and a recovery in domestic consumption. However, with investors taking profits at higher levels, the benchmark index erased all gains to end the session lower.
Amongst individual stocks in London, Shire is the best performer in the FTSE 100, up 4.4%. The drugmaker said late Thursday its new drug application for lifitegrast, a treatment for dry eye disease in adults, has been granted a priority review designation by the US Food and Drug Administration. This designation means that the new drug application has a review target of eight months, compared to the standard twelve months. The FDA is expected to provide a decision on October 25.
Broadcaster ITV, up 4% at 271.75 pence, is the second biggest gainer in the blue-chip index. Morgan Stanley has lifted ITV's price target to 300p from 240p, keeping its Overweight rating. Also amongst the top gainers, Barratt Developments is up 3.0% at 557.15p after Jefferies upgraded the housebuilder to Hold from Underperform, lifting its price target to 567p from 379p.
Miners are dragging the FTSE 100, with Anglo American down 1.9%, Glencore down 1.6%, Rio Tinto down 1.4% and BHP Billiton down 0.8%.
FTSE 250-listed Vedanta Resources, down 3.7%, said its oil and gas production and its zinc production for the full year were both hit by disruptions, though it said its fourth quarter oil and gas production stabilised and it reported better zinc production in the quarter.
AIM All-Share-listed Majestic Wine said it will acquire online wine retailer Naked Wines International for up to GBP70 million in cash and shares, with founder and chief executive officer of Naked Wines Rowan Gormley to head up the enlarged group. Majestic will pay GBP50 million in cash, funded by new debt facilities, and up to GBP20 million of contingent consideration in shares.
Investec upgrades Majestic Wines to Buy from Hold, lifting its price target to 360 pence from 350p, saying the acquisition is at an attractive price and opens up growth potential beyond the UK for the wine retailer. Majestic, which also said it will skip some dividends, is down 4.3% at 304.12p.
By Daniel Ruiz; [email protected]
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