14th Jan 2014 17:05
LONDON (Alliance News) - The FTSE 100 managed to close a touch higher Tuesday thanks to positive UK and European economic data, some stand-out individual stock gains, and after Wall Street recovered strongly from Monday's sharp losses.
The main London indices had started sharply lower Tuesday after the biggest one-day fall on the US markets since September, stoked by fears that the Federal Reserve would move quickly to further reduce its economic stimulus package.
However, the FTSE 100 closed up 0.1% at 6,766.86, while the FTSE 250 pared its losses and closed down just 0.1% at 16,236.02 while the AIM All-Share ended down 0.3% at 881.14.
The consumer price index in the UK dropped to the government's 2.0% target for the first time in four years in December, according to data from the Office for National Statistics. Economists had expected the figure to remain steady at November's Consumer Price Index figure of 2.1%. The fall was largely explained by slower increases in the price of food, although the pre-Christmas discounting in the wider retail sector played its part.
Month-on-month, UK CPI rose to 0.4% in December, from 0.1% in November, slightly less than the 0.5% that had been expected. Core CPI, which strips out volatile products such as food and energy, also slowed to a 1.7% increase year-on-year in December from 1.8% previously.
A similar data release from France earlier in the morning, where deflation is still of concern, saw year-on-year CPI drop to 0.8%, from 0.9% previously.
"UK inflation has been well above target in recent years", says Rabobank senior strategist Jane Foley. "The fall in UK CPI may allow real wages to push higher for the first time in three of four years."
European equity markets also regained early losses after stronger-than-expected eurozone industrial production data. Production rose by 3.0% year-on-year in November, beating expectations of a 1.4% rise. Month-on-month, the rise was 1.8%.
The CAC 40 and the DAX both closed up about 0.2%.
The recovery was helped when the US markets moved higher Tuesday, helped by estimate-beating earnings from banks JP Morgan and Wells Fargo.
JP Morgan reported earnings per share of USD1.40 for the fourth quarter, beating analyst consensus expectations of USD1.35 per share.
The major data release from the US Tuesday, monthly retail sales, showed a rise of 0.2% in December, slowing from 0.4% in November but beating economists' expectations of a 0.1% rise. The figure for October was revised down to 0.5% from 0.6%, while the November number was almost halved to 0.4% from 0.7%.
After the European equity market close, the DJIA was up 0.5% and the S&P 500 up 0.8%
Within the UK markets, BSkyB was the top gaining blue-chip stock, closing up nearly 4.0% after receiving an upgrade to Buy from Neutral by analysts at UBS. Hargreaves Lansdown closed up 1.5% after also receiving an upgrade, to Overweight from Equal-Weight, from Morgan Stanley.
Ashmore Group weighed heavy on the FTSE 250. The asset manager's share price plummeted more than 12% after it said assets under management contracted as it recorded net outflows of USD3.5 billion over its fiscal second-quarter.
AIM giant ASOS also proved a drag on the alternative market. Shares in the retailer closed down close to 5%, despite the group reporting a 38% rise in group sales over the four months to the end of 2013. There are concerns over slowing growth in sales in the US, and the share price seems to have lost momentum slightly after gaining 163% during 2013.
Still to come after the European market close Tuesday, speeches from Philadelphia Fed President Charles Plosser and Dallas President Richard Fisher. The remarks by Plosser and Fisher, "may carry a bit of added weight considering that, unlike Lockhart, both are voting members of the rate-setting FOMC committee in 2014," said Ilya Spivak, currency strategist at DailyFX.
The US markets were hit Monday by speeches from Atlanta Federal Reserve President Dennis Lockhart and St. Louis Fed member James Bullard, who both said they will continue to support further tapering of the central bank's bond buying programme.
The pound has out preformed other majors in the forex market Tuesday, currently trading at USD1.6450 and EUR0.8315.
A quieter day in the data calendar lies ahead Wednesday, with just the November Conference Board Economic Index scheduled for the UK, at 1000 GMT. The index tries to predict future trends in overall economic activity.
Eurozone trade balance numbers are also due at 1000 GMT, while in the afternoon there is some second tier US data: MBA Mortgage applications at midday and the NY Empire State Manufacturing index and PPI data at 1330 GMT.
In the UK corporate calendar, Tullow Oil, Taylor Wimpey and Burberry Group are amongst the big names due to release a trading statements Wednesday, while AIM listed Fusionex International are scheduled to release full-year results.
By Jon Darby; [email protected]; @jondarby100
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
Tullow OilBurberryHargreaves LansdownAshmoreTaylor WimpeyASOSFXI.L