15th Jun 2016 07:33
LONDON (Alliance News) - Stocks in London were higher Wednesday morning, with miners and banks helping the FTSE 100 index to recover some of the ground lost in the last four sessions after investor confidence was hit by polls show the Leave vote in the lead ahead of in the UK's EU referendum next week.
The FTSE 100 was up 0.9%, or 53.52 points, at 5.977.05. The FTSE 250 index was adding 0.8% at 16,356.52 and the AIM All-Share was up 0.3% at 717.05.
In Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt were up 0.9% and 0.7%, respectively.
European stock markets were recovering some ground Wednesday, having posted losses since Thursday last week as investors shunned equities for the safe havens of gold and government debt ahead of the European Union membership vote in the UK on Thursday next week.
"Given the opinion polls, the dramatic change seen in the betting odds and low sentiment in general towards world stock markets it seems quite possible we could see further falls as an increasing probability of Brexit is being priced in," noted Mark Dampier, research director at Hargreaves Lansdown.
However, Dampier said that, while markets await the result of the vote, "this fall could well represent a great long-term buying opportunity".
The most recent stretch of the sell-off occurred on Tuesday, following a pair of ICM polls published by the Guardian newspaper after the London equities market close on Monday. They had the Leave campaign ahead by 53% to 47% when the "don't knows" were excluded. Another poll released late Tuesday by TNS online found that 47% of people are likely to vote to leave the EU, with 40% to vote to remain. TNS said 13% were undecided or wouldn't vote at all.
The mining and banking sector had been hit hard in recent sessions, but they were taking back some ground Wednesday morning. The FTSE 350 Mining sector index was up 2.5%, while the FTSE 350 Banks sector index was up 1.4%.
Among individual stocks in the FTSE 100, Berkeley Group Holdings was the worst performer, down 1.1%. The housebuilder said both its revenue and pretax profit dipped in its recent financial year, after it sold more homes but at a lower average selling price, due to the higher-end market in the UK being hit by increased transaction taxes and as the country's European Union referendum approaches.
Berkeley Group, which almost exclusively focuses on more-expensive developments in London and the South East of England, posted revenue of GBP2.05 billion for the year ended April 30, down from GBP2.12 billion the year earlier, comprising of GBP1.99 billion from operations and GBP53.4 million from the sale of ground rent assets.
Berkeley said this decline came after it sold 3,776 homes during the year at an average selling price of GBP515,000, compared to the 3,355 homes sold at an average selling price of GBP575,000 a year earlier.
In the FTSE 250, shares in AVEVA Group were down 15% after it said preliminary talks with Schneider Electric about a potential reverse takeover of AVEVA have been terminated, just two days after confirming it had renewed talks with the French industrials group.
Shares in AVEVA had been suspended from trading Monday after it said it had received a conditional proposal from Schneider for a reverse takeover, following a previous reverse takeover deal between the two had collapsed in December last year. As the new talks have now been terminated, AVEVA requested the suspension of its shares be lifted.
At the other end of the mid-cap index, Jimmy Choo was the biggest gainer, up 9.8%. The luxury show and accessories retailer said it has made a good start to 2016 and is trading in line with its expectations, in a statement ahead of its annual general meeting on Wednesday. Jimmy Choo acknowledged "headwinds facing the majority of the sector in 2016" but said the company's "successful growth strategy continues to deliver".
Following the update, Liberum lifted its recommendation on Jimmy Choo shares to Buy from Hold.
In Asia on Wednesday, the Japanese Nikkei 225 index finished up 0.4%. In China, the Shanghai Composite added 1.6%, while the Hang Seng index in Hong Kong is up 0.4%.
After the London equities close Wednesday, the US Federal Reserve will take centre stage. The policy-setting Federal Open Market Committee finishes Wednesday its two-day monetary policy meeting, with its interest rate decision announced at 1900 BST and a press conference with Fed Chair Janet Yellen at 1930 BST.
"The markets price zero chance of a rate increase at today's FOMC meeting. Rather, the focus of the Fed will likely be on offsetting some of the message of the weak jobs report with a more balanced assessment of the wider economy," said analysts at Societe Generale.
A big miss for US job creation in May killed any chance of a Federal Reserve interest rate hike on Wednesday, and analysts say a move in September now looks more likely, though a rebound in jobs in June still could prompt the US central bank to take action at its July meeting.
Also in the economic calendar Wednesday, the UK's ILO unemployment rate and average earnings are at 0930 BST. US MBA mortgage applications are due at 1200 BST, while New York manufacturing index is at 1330 BST, as well as the US producer price index. US industrial production is due at 1415 BST, while EIA crude oil stocks are due at 1530 BST.
By Daniel Ruiz; [email protected]
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