29th Apr 2014 10:07
LONDON (Alliance News) - The FTSE 100 opened at a seven-week high Tuesday, led by Shire PLC as merger and acquisition talk in the pharmaceutical sector continues to boost equity sentiment.
Indices have slipped slightly from the early morning peak amid a fresh round of sanctions against Russian officials and UK GDP numbers coming in slightly behind forecasts.
Having peaked in very early trade at a seven-week high of 6,751.06, the FTSE 100 remains up 0.5% at 6,731.52. The FTSE 250 is up 0.5% at 15,905.73, and the AIM All-Share is up 0.2% at 814.30.
In major European markets, the German DAX 30 is up 0.7% and the French CAC 40 is up 0.1%.
Following Monday's new US sanction list that included seven Russian officials and seventeen companies, the EU has Tuesday announced its own new list, imposing travel bans and asset freezes on nine Russian officials and six leaders of the pro-Russian separatists in Ukraine.
EU foreign policy chief Catherine Ashton said she was alarmed by the worsening security situation and the "downward spiral of violence and intimidation" in eastern Ukraine.
While the sanctions tighten and seven members of the Organisation of Security and Cooperation in Europe remain hostages of the separatists in eastern Ukraine, the general market continues to look past the situation, although equities are struggling to push to new long-term highs.
"While sentiment continues to remain largely positive it should also be noted that despite the expectation of an improvement in economic data this week, that stock markets haven?t, as yet, been able to push past their recent highs, suggesting some concerns about the wider recovery," said CMC Markets chief market analyst Michael Hewson.
The UK economy grew at 0.8% in the first quarter of 2014, according the the preliminary reading from the Office for National Statistics, which is slightly slower than the 0.9% growth expected by economists. Year-on-year, UK GDP was seen at 3.1% in the first quarter, slightly lower than the 3.2% that had been expected.
"Today's figures show that Britain is coming back - but we can't take that for granted," said chancellor of the Exchequer George Osborne.
The pound, which had been trading against the dollar at levels not seen since November 2009 in the run up to the release, slipped to a session USD1.6789, but has since recovered to USD1.6810.
"The pound has risen to fresh highs against the dollar in recent days but the slightly weaker than expected GDP figures have seen it fall back and it could drop below the 1.68 mark. Although this is a very minor blow for the chancellor and the Bank of England, the outlook is still positive and the British economy remains buoyant," said UFXMarkets managing director Dennis de Jong.
The euro remains well supported against the dollar, currently trading at USD1.3865. Forex traders are paying more attention to European Central Bank President Mario Draghi's reported comments than the drop in eurozone economic confidence just announced.
The eurozone economic sentiment indicator slipped to 102.0 in April from 102.4 in March, a disappointment compared to economists expectations for a rise in the index to 103.0.
However, Draghi reportedly told German lawmakers earlier in the morning that the prospect of quantitative easing by the ECB remains isn't imminent and remains relatively unlikely for now.
Preliminary German consumer price inflation data, still to come Tuesday at 1200 GMT will be a key focus for euro watcher in light of Draghi's comments. CPI in Europe's largest economy is expected to have risen to 1.4% year-on-year in April from 1.0% in March. The harmonised index, most closely watched by Draghi and fellow policy makers, is expected to rise to 1.3% from 0.9. An increase in inflation would ease pressure on the ECB to take any form of action to fend off falling prices.
Within UK equities, Shire PLC leads the FTSE 100 gainers, up 3.5% on a Reuters report that US peer Allergen could be preparing a takeover offer. "This would be a revival of an approach made recently and which came to nothing after talks but shows the appetite for consolidation in the sector," said Accendo Markets head of research Michael van Dulken.
AstraZeneca shares are a little softer Tuesday, currently down 0.7% following the meteoric rise on Monday that followed the confirmation from Pfizer of its bid interest in the company.
In the FTSE 250, Telecity Group leads the gainers, up almost 13% after reaffirming its full-year currency neutral revenue growth target of 10% for 2014. The shares had slumped almost 12% in the last month ahead of the interim management, and the update will "reassure a nervous market in the short-term," said Liberum Capital analyst William Shirley.
At the other end of the FTSE 250, Serco shares are down nearly 22% after saying late last night that, after a more challenging 2014 so far, it is reviewing its performance and may have to revise its expectations lower. The outsourcing company said that ahead of its upcoming annual general meeting on May 8 and the arrival of new Chief Executive Rupert Soames on May 1 it is reviewing its performance so far this year, noting that performance has been more challenging than previously expected.
A busy day in the US corporate calendar will give the markets lots to look at this afternoon, with first quarter numbers due from further big technology names Twitter and ebay.
Ahead of the earnings releases, the US futures markets indicate a modestly higher start on Wall Street, with the DJIA and the S&P 500 futures both currently up about 0.4%.
By Jon Darby; [email protected]; @jondarby100
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
AstrazenecaSercoShire