26th Mar 2014 17:19
LONDON (Alliance News) - UK stocks closed mixed Wednesday, with the FTSE 100 ending the day almost perfectly flat, as investors were starved of any fresh UK macroeconomic data.
London's major stock indices all opened the session firmly higher as traders were by buoyed by a positive close on Wall Street overnight, following some exceptionally strong US data.
However, a lack of domestic catalysts, combined with a mixed early trading session in the US, saw UK equity markets shed some of these gains as the session drew to a close.
Eventually, the FTSE 100 closed almost perfectly flat at 6,605.3, having ended the day at 6,604.89 on Tuesday, the FTSE 250 closed up 0.6% at 16,252.92, while the AIM All-Share index closed down 0.1% at 850.5.
In the US, at the London stock market close, the DJIA and S&P 500 are both up 0.2%, while the NASDAQ Composite is down 0.2%.
Major European equity markets outperformed their UK counterparts Wednesday, lifted by comments made by Bundesbank President Jens Weidmann on Tuesday.
Weidmann, who has previously been vocal in opposing the potential for the European Central Bank to initiate quantitative easing, said that the central bank currently has an open mind about the use of negative interest rates and large-scale asset purchases in an attempt to fight a strong euro.
Subsequently, the CAC 40 in Paris closed up 0.9%, while the DAX 30 in Frankfurt closing up 1.2%.
Nevertheless, the consensus among analysts remains that asset purchases by the ECB remain unlikely.
"In our view, too much has been read into the remarks," says UBS economist Reinhard Cluse. "Our firm conviction remains that QE is not coming, because we believe that the European recovery is on track, that the Eurozone will not slide into deflation, and that the environment for QE in Europe remains complicated, irrespective of Mr Weidmann's much-quoted remarks."
At the individual UK stock level, life insurers Legal & General and Standard Life were amongst the biggest risers in the FTSE 100 Wednesday.
Legal & General ended the day up 2.9% after it announced that it had won a bulk annuity contract - largest ever bulk annuity contract arranged by a pension scheme in the UK - with ICI Pension Fund, covering GBP3.00 billion of its liabilities.
Although the individual annuities market in the UK has been left reeling by new government plans set to give people more flexibility over how they manage their pension pots in retirement, the bulk annuities market wasn't the target of Chancellor of the Exchequer George Osborne's 2014 Budget.
Standard Life, closing up 7%, was the index's biggest winner. Shares in the firm jumped after it said it had agreed to buy Ignis Asset Management from FTSE 250-listed Phoenix Group Holdings in a GBP390 million cash deal. The two companies also agreed on a long-term strategic asset management deal, which will result in Standard Life managing assets for Phoenix's life subsidiaries.
Phoenix, which closed up 4.4%, was among the leading gainers in the mid-cap index in the wake of the deal.
As well as the deal with Standard Life, Phoenix reported that its 2013 operating profit increased by GBP10.0 million to GBP439.0 million, while it generated GBP817.0 million in cash flows from its operating subsidiaries, including cash flows of GBP332.0 million from management actions. In 2012, cash flows from operating subsidiaries totalled GBP690.0 million.
However, it also said that pretax profit fell to GBP420.0 million from GBP557.0 million after operating expenses spiralled to GBP3.83 billion from GBP649.0 million.
Back in the FTSE 100, SSE was another big gainer, closing up 1.3%. The major UK energy supplier's shares jumped after it announced a major asset-disposal plan, cost-cutting initiatives, and a freezing of UK household energy bills ahead of its full-year results next week.
As part of a new value programme, which is focused on simplifying operations and securing more operational efficiencies for the company, it said that it is now planning asset and business disposals that will secure proceeds and debt reduction estimated to total approximately GBP1 billion. It also said it had identified further operational efficiencies that will result in annual savings in overheads of around GBP100 million by March 2016 but will result in a reduction of roughly 500 UK employees.
At the same time, it said that it will freeze its household energy prices in the UK at current levels until at least January 2016, subject to no marked or sustained increase in wholesale prices and no new environmental, social or other policy costs.
"We're setting out a positive agenda for customers, including our price freeze to 2016; we're making sure our own house is in order for the future by streamlining and simplifying our business; and we're making clear we wish to work with people to find more ways of taking costs out of energy bills," Chief Executive Alistair Phillips-Davies said.
"In all of this, I hope that people will see a company like SSE not as part of the problem but as part of the solution," he added.
At the other end of the spectrum, Lloyds Banking Group was a heavy faller, closing down 4.9%, after the UK government said it had raised GBP4.2 billion in its sale of a second tranche of the company's shares.
The news means that the government has now recouped GBP7.41 billion of the roughly GBP21 billion it had to pump into the bank during the financial crisis, and it takes the government's stake down to 24.9% from 32.7%.
Enquest, closing down 12%, was the FTSE 250's biggest loser. The oil and gas development and production company said its pretax profit fell in its full-year 2013 despite an increase in revenues, as costs and expenses hit the company.
Although the firm's production increased 6.2% in the year, its cost of sales increased 18% to USD540.8 million from USD458.4 million the previous year, leading to a 2.5% fall in gross profit for the company to USD420.4 million from USD431.1 million in 2012.
In forex news, the Bank of England and the People's Bank of China reached an agreement to settle yuan trades in London Wednesday.
"While there should be no immediate effects of the deal on currencies, the longer term impact will be less demand for US dollars which are currently needed to transact in the Chinese currency," said Jasper Lawler, market analyst at CMC Markets.
At the UK equity market close, the Euro trades at USD1.3787, the pound trades at USD1.6564, while the dollar trades at CNY6.2082.
In the data calendar Thursday, UK Nationwide house price numbers are released at 0700 GMT, followed by UK retail sales data at 0930 GMT.
In the US, jobless claims data, personal consumption expenditure figures and GDP information are scheduled for 1230 GMT, ahead of pending home sales data at 1400 GMT. The Kansas Federal Reserve manufacturing activity survey is released at 1500 GMT.
In the corporate calendar, blue-chips Compass Group and London Stock Exchange Group are joined by mid-cap Thomas Cook Group in providing trading statements. FTSE 250-listed Afren and International Public Partnerships release full-year results.
By James Kemp; [email protected]; @jamespkemp
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
LSE.LTate & LyleThomas CookSSEPhoenix Group HoldingsLegal & GeneralEnquestCompass GroupInternational Public PartnershipsSL..LAFR.L