28th Feb 2014 10:49
LONDON (Alliance News) - UK and European stocks are mixed Friday, while the euro has received a boost as eurozone inflation remains stable, suggesting the European central bank is likely to keep policy unchanged at next week's rate setting meeting.
Stock markets continue to trade cautiously ahead of the release of revised fourth-quarter US GDP numbers still to come, with many analysts expecting a big downgrade due to the winter storms that have wreaked havoc in the US recently.
By mid-morning Friday the FTSE 100 is down 0.1% at 6,802.55, the FTSE 250 is up 0.5% at 16,601.55, and the AIM All-Share is up 0.3% at 888.70.
It's also a mixed picture in Europe, with the CAC 40 down 0.3% and the DAX 30 up 0.1%.
Eurozone-wide consumer price growth remained stable in February, with CPI recording an 0.8% rise. Economists had been expecting a small slip in the CPI growth rate to 0.7%, given that German CPI growth, reported on Thursday, eased to 1.2% in February from 1.3% in January.
With debate ongoing over whether the European Central Bank will see fit to ease monetary policy further at next week's rate setting meeting, the CPI data came as a positive surprise for the euro, which jumped almost a cent against the dollar to a new high for the year of USD1.38.
The euro also has gained against the pound, with European common currency currently trading at GBP0.8240. The dollar is the weakest of the major currencies Friday, with the pound also stronger after further strong readings of the UK housing market. Against the dollar, the pound has reached a 9-day high of USD1.6769.
UK house prices increased by 9.4% year-on-year in February, according to the latest Nationwide house price index. The index shows prices accelerating from the 8.8% growth recorded in January, faster than the 9.0% rise that was expected by economists.
Economists say that the fastest house price inflation since May 2010 is being supported by the constrained supply of housing. "In England around 109,500 new homes were built in 2013, this is 38% below the level recorded in 2007 and around half the projected number of households that are expected to form each year in the years ahead," says Shore Capital analyst Gerard Lane.
The UK's fascination with property continues to be evidenced by traffic volume on Rightmove. The property search website announced full-year results Friday and said its site traffic increased by 27% to 14 billion in 2013 - that's over 38 million visits per day, or almost 1.6 million per hour. Rightmove also saw a solid increase in its profits, and the shares are amongst the biggest gainers in the FTSE 250, up 4.9%.
Outsourcing group Serco has received a big boost on the news that it has poached Aggrekko Chief Executive Rupert Soames as its new CEO. Serco shares are up more than 9%, leading the FTSE 250 gainers on hopes that the well-respected executive can fix the problems there. Meanwhile, the loss to Aggrekko sees its shares down 3.5%.
Old Mutual is the biggest gainer in the FTSE 100. The insurer is up 4.8% after saying its pretax profits rose by 11% in 2013. The life-insurance and investment company also said it intends to spin-off its US Asset Management business this year. Shore Capital expects the market to respond favourably to the planned IPO of the US asset management business, which, with funds under management of USD257 billion, could be valued at over USD3 billion.
Pearson leads the blue chip fallers. The publisher is down 6.1% after posting lower 2013 pretax profit, as it was hit by lower margins in North America and an accounting charge for the merger of its Penguin books unit with Random House.
Still to come Friday are US GDP and personal consumption numbers at 1330 GMT. Since the initial reading of fourth-quarter GDP one month ago, most US macroeconomic data have disappointed, with commentators widely blaming the poor weather and heavy snow fall in parts of the US. Whatever the reason for the lighter readings, economists are expecting the GDP numbers to be revised significantly lower.
FXStreet.com says economists are looking for an annualised fourth-quarter print of 2.5%, down from the initial reading of 3.2%. Economists are expecting growth in personal consumption expenditure to drop to 0.7%, from 1.9% seen previously.
Also still to come Friday, the Reuters/Michigan consumer sentiment index at 1455 GMT, as well as a speech from Bank of England Governor Mark Carney at 1530 GMT.
By Jon Darby; [email protected]; @jondarby100
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AGK.LPearsonOld Mutual PLCRightmoveSerco