3rd Oct 2014 09:43
LONDON (Alliance News) - UK shares rose sharply Friday morning, rebounding from the heavy losses incurred on Thursday from disappointment in the outcome of the European Central Bank meeting, with discount airline easyJet providing some early cheer.
The FTSE 100 is trading up 0.9% at 6,503.16 in mid-morning trade. The FTSE 250 is up 1.1% to 15,176.05, while the AIM All-Share index lags behind, gaining only 0.2% at 738.95.
Markit services PMI for the UK in September fell to 58.7 from 60.5 in the previous month. The reading also missed economists forecast of 59.1. Berenberg's chief UK economist Rob Wood says while growth has been well above the long-run average of 56, the future is still uncertain.
"We are cautious about growth over the next six months. Eurozone growth has disappointed, geopolitical risks have risen this year, the forthcoming general election creates domestic political risks, and the majority of the public expect rate hikes within the next twelve months. Any of those could slow UK growth a little in the near-term," Wood says.
Services PMI data for Spain, Italy and France came in below expectations in September, causing the eurozone PMI to fall to 52.4, missing the forecast of 52.8 and below August's print of 53.1. However, the region's biggest economy, Germany, recorded a rise in its service PMI for sixteenth successive month. The reading came in at 55.7, ahead of the 55.4 forecast and the August print of 54.9.
"In contrast to the struggling manufacturing sector, Germany?s service sector continued to power ahead at the end of the third quarter. Output and new orders rose sharply and companies continued to take on additional workers, boding well for the near-term," says Markit economist Oliver Kolodseike. "However, service providers? confidence towards the business outlook fell to a 15-month low, as companies expect the introduction of a national minimum wage in January 2015 to have at least some negative effect on economic growth."
Eurozone retail sales accelerated in August, rising to a 1.9% growth year-on-year, significantly outstripping expectations and July's reading of 0.5%.
In Paris, CAC 40 also is clawing back Thursday's losses, gaining 0.7%, while the DAX is closed for the Day of German Unity.
EasyJet is the best performing stock in the FTSE 100, with its shares rising 8.1%. The company raised its full-year pretax profit guidance, saying it had taken about GBP5 million of revenue from Air France after that airline was hit by a costly pilots strike and after fuel prices swung in its favour. In a trading update, the low-cost airline said it now expects pretax profit for the year that ended on September 30 to come in between GBP575 million and GBP580 million, up from the GBP545 million to GBP570 million guidance it gave in July.
United Utilities Group's shares are also trading well after the company said it has scaled back its future infrastructure spending plans, as it submitted to water industry regulator Ofwat its latest proposal on how it will control the prices it charges customers over the next five years.
In a statement, United Utilities said it now plans to reduce planned total expenditure by about GBP370 million compared with the previous proposal it put to the regulator, with about GBP280 million of that coming from cost efficiencies it expects to make between 2015 and 2020. The other GBP90 million will come from scaling back its trunk mains resilience work and National Environmental Programme work. The company's shares are up 3.1%.
Renishaw is the biggest gainer in the FTSE 250, with its shares rising 9.4% in value. The engineering company confirmed its financial year has started well, with strong first quarter trading which it said it expects to continue into the second. It said its first-quarter revenue increased year-on-year, up to GBP101 million from GBP79 million a year earlier, boosted by growth in its Asian business. Renishaw added that it expects this performance to continue into the second quarter.
Still ahead is the US non-farm payrolls and unemployment rate for September, both at 1330 BST, before ISM non-manufacturing PMI for September at 1500.
Futures indicate a higher opening for Wall Street with the three main indices shown to open 0.5% higher.
By Neil Thakrar; [email protected]
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
RenishaweasyJetUnited Utilities