17th Oct 2014 15:51
LONDON (Alliance News) - Shares across Europe have ended a week of volatility strongly, as suggestions from central bankers in the US and UK that worrying recent economic data could delay interest rate rises and some positive data from the US helped to drive equity markets higher.
The FTSE 100 ended up 114 points, or 1.9%, to 6,310.29, the FTSE 250 closed up 1.9% at 14,757.62 and the AIM All-Share up 1.9% at 689.13. In Europe, the CAC 40 ended up 2.9% and the DAX closed up 3.1%. US stocks were also trading higher at the London close, with the DJIA, S&P 500 and Nasdaq Composite all up 1.7%
"The fear has evaporated out of the eurozone today as the bond markets have calmed down but I wouldn’t get too comfortable as next week is likely to be a rocky ride. The eurozone debt crisis has a history of rearing its ugly head, Ebola has yet to be contained, China’s GDP report will tell us the golden days of Chinese growth are over. Confidence in equity markets takes months to be gained but it is lost in hours," said IG Market Analyst David Madden.
The FTSE 100 suffered its biggest intraday loss of the year on Wednesday as markets across the world were rattled by growing fears about the health of the global economy, particularly the eurozone. The FTSE 100 eventually was down just 0.5% over the week as a whole, but it traded within a 332 point range over the week.
Friday's gains were driven by doveish comments from St Louis Federal Reserve Bank President James Bullard. In an interview with Bloomberg News, Bullard said the Fed should consider delaying the end of its asset purchase program to halt the decline in inflation expectations. Furthermore, Bank of England economist Andrew Haldane said UK interest rates could remain at a record low for a longer period than he expected three months ago.
"Investors appear to be taking heart from the belief that central bankers are listening to their concerns about a premature tightening of monetary policy," said Michael Hewson, chief market analyst at CMC Markets.
"It does speak to a larger problem though with respect to who controls financial markets in that in the first sign of significant volatility central bankers feel compelled to offer soothing words of comfort in the manner of an adult trying to calm a sulky child with the offer of more sweets," he added.
Better-than-expected results from the US Reuters/Michigan consumer sentiment index for October helped to sweeten investor sentiment. The index climbed to 86.4, surpassing expectations of 84.1 and September's reading of 84.6.
Rolls Royce shares ended down 15%, making it by some distance the heaviest faller in the FTSE 100. The engineering and aerospace company cut its outlook for the second time this year, saying it expects underlying revenue this year to be lower and its outlook for 2015 has become more challenging.
Tullow Oil closed as the best performing stock in the blue-chip index, gaining 8.6%. Societe Generale upgraded the company to Buy from Hold, saying it has the ability continue financing high-margin production growth projects in Ghana and West Africa, despite the multi-year low oil price.
Petrofac was also amongst the biggest gainers in the FTSE 100, closing up 7.3%. The company said it received record awards for its engineering, construction, operations and management activities and it remains on track to hit profit targets for the 2014.
The oil stocks were also supported by an overnight oil price rally. Oil prices have also fallen this week, with Brent oil hitting a low of USD82.90, due to the economic concerns and a lack of demand.
Gold fell Friday, having been well supported earlier in the week as investors flocked to safe-haven assets.
The economic calendar on Monday is light. The German producer price index for September will be released before the London open at 0700 BST, before eurozone current account for August at 0900 BST.
The only corporate release of Monday will be from household and personal-care products company McBride, which will be releasing an interim management statement.
By Neil Thakrar; [email protected]
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Related Shares:
Tullow OilPetrofacMcbrideRolls-Royce