16th Oct 2015 11:06
LONDON (Alliance News) - UK stocks were higher midday Friday, but shares in Burberry Group were down again after suffering a string of price target cuts, while Wall Street was called for a mixed open ahead of further US earnings reports.
The FTSE 100 index was up 0.6% at 6,377.98 points, the FTSE 250 was up 0.3% at 17,002.55 and the AIM All-Share was up 0.3% at 738.44. In Europe, the French CAC 40 and the German DAX 30 were both up 0.6%.
Stocks were called for a mixed open in New York, as the US earnings season continues with third-quarter results from General Electric, due before the market open, expected to grab market attention.
The DJIA was pointed down 0.2%, the S&P 500 index down 0.1% and the Nasdaq 100 up 0.1%. Wall Street closed higher on Thursday, with the Dow up 1.3%, the S&P 500 up 1.5% and the Nasdaq Composite up 1.8%.
In the US economic calendar, US industrial production and capacity utilisation are due at 1315 BST, a preliminary reading of the Reuters/Michigan Consumer Sentiment Index is at 1500 BST, and JOLTS Job Openings data are at 1600 BST.
Asian stocks ended higher Friday, with the Japanese Nikkei 225 index up 1.1%. In China, the Hang Seng in Hong Kong closed up 0.8% and the Shanghai Composite finished up 1.6%.
"Equity positive for the last session of the week, following an Asian rally which extended its run to the longest since April," said Mike van Dulken, head of research at Accendo Markets.
"Market risk appetite still driven by weak macro data buoying hopes of continued Fed rate hike delay and more stimulus from global central bank peers (People's Bank of China, Bank of Japan, European Central Bank)," van Dulken added.
The next Federal Open Market Committee is scheduled for October 27-28, but before that, the ECB meeting on monetary policy is arranged for next Thursday.
Some analysts expect President Mario Draghi to extend the central bank's quantitative easing programme. Anatoli Annenkov, senior economist at Societe Generale said Draghi has a tough task of managing expectations.
"On the one hand, he will need to continue sending a doveish message of standing ready to act if needed: on the other hand, he does not have enough evidence of a sharp slowdown in activity and inflation to signal an imminent policy reaction," Annekov said.
The economist does not expect the Volkswagen scandal or the Chinese economic slowdown to derail euro area growth, but does assume the ECB will, at some point, extend its QE programme and targeted longer-term refinancing operations beyond September 2016, adding a corporate bond purchase programme in the spring of next year.
"If a weaker inflation outlook emerges in the short term, we would expect accelerated asset purchases, rather than a deposit rate cut," Annekov added.
Ahead of the ECB meeting, final data from Eurostat showed that eurozone inflation turned negative as initially estimated in September.
Consumer prices fell 0.1% year-on-year in September, offsetting a 0.1% rise in August. The rate matched flash estimate published on September 30. The ECB's target is to bring inflation to "below, but close to, 2% over the medium term".
Excluding energy, food, alcohol and tobacco, core inflation remained unchanged at 0.9% in September. The core rate also matched preliminary estimate.
On Thursday, ECB Governing Council member Ewald Nowotny said new measures are required to achieve price stability as core inflation is clearly below the target.
"The ECB is using the monetary policy instruments available - but it is quite obvious that in the current macroeconomic situation additional sets of instruments are necessary," Nowotny said at a conference in Warsaw.
On the London Stock Exchange, luxury goods retailer Burberry Group was the worst blue-chip performer, down 2.2%. The trench coat maker suffered a downpour of price target downgrades by the likes of Societe Generale, Goldman Sachs, Bernstein, Credit Suisse, Deutsche Bank, UBS, Jefferies and Barclays.
On Thursday, Burberry said its exposure to the slowing Chinese market was hitting its sales growth, and its above-sector-average sales derived from the market meant it took a heavier hit than its rivals. The stock closed the day down 8% having hit lows not seen since the end of 2012.
At the other end of the FTSE 100, oil producers were benefiting as the price of Brent oil crept back above USD50 a barrel, to trade at USD50.08. Brent was quoted at USD48.81 barrel at the London close on Thursday, following a marginally stronger-than-expected US inflation reading.
Royal Dutch Shell 'A' shares were up 2.0% and BP shares up 2.1%.
In the FTSE 250, Provident Financial Group was the top gainer, up 4.6%. The lender said it has found a new managing director for its Vanquis Bank credit cards division, after Michael Lenora stated his intention to retire in 2016.
The news came as the group said that all three of its businesses performed well in the third quarter, reinforcing the company's confidence in generating "good-quality growth" in 2015 as a whole.
Shares in Evraz were up 2.7%. The Russian steel maker and coal miner said production of all of its products and commodities rose in the third quarter from the second, but in the first nine months of 2015 most production areas were down year-on-year. Coking coal production was the only area to experience a quarter-on-quarter fall.
Inter-dealer ICAP was down 2.6% after being downgraded to Equal Weight from Overweight by Barclays.
On AIM, the share value in China New Energy was more than doubling after saying it is set to sign a new deal with its existing partner to develop a cassava-to-bioethanol plant in Zimbabwe.
Although the company intends to enter the deal, it said the media has incorrectly suggested it has already signed an agreement and clarified a deal will signed imminently.
SyQic was up 13%. The company, which provides live television and on-demand video content on mobile devices, revealed a new 'click to pay' payment platform for its flagship product, Yoomob, teaming up with Estonian global mobile payment provider Fortumo, a move intended to cut its reliance on telecommunication providers.
By Daniel Ruiz; [email protected]
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