5th Feb 2014 10:57
LONDON (Alliance News) - UK stocks are trading higher Wednesday, with the FTSE 100 set to snap a five-day losing streak, as investors look to pare some of the losses recorded in recent sessions.
Meanwhile, the pound has been knocked after the UK services PMI fell short of forecasts.
By mid-morning Wednesday, the FTSE 100 is up 0.4% at 6,472.49, the FTSE 250 is up 0.4% at 15,601.09, and the AIM All-Share index is up 0.1% at 857.73.
Major European stock indices are also higher, with the French CAC 40 up 0.3% and the German DAX 30 up 0.1%.
"Given the returns from buying into weakness over the last 12 months, it?s no surprise that we would see a bounce on a European open at some stage," says Toby Morris, senior sales trader at CMC Markets.
"A positive US close coupled with some good earnings in Japan overnight has been enough for buyers to brave it and step in," he adds.
The DJIA, Nasdaq Composite, and S&P 500 all closed up between 0.5% and 0.9%. The Nikkei closed up 1.2% in Tokyo.
In UK economic news, the services PMI for January missed expectations. The reading fell to 58.3, from December's 58.8, missing expectations of a rise to 59.0.
Sterling dropped in the aftermath of the release. The currency currently trades at USD1.6283, EUR1.2040, CHF1.4719 and JPY164.895.
The French, Italian and German services PMI all beat expectations. The German number came in at 55.5 in January, significantly higher than both the 53.5 recorded in December, and economists' forecasts of a much more modest increase to 53.6.
While the French and Italian figures remain under the 50.0, suggesting contraction, both recorded significant rises from their December levels.
Nevertheless, Markit's services PMI for the wider eurozone area rose less-than-expected, jumping to 51.6, from 51.0. Economists had forecasts a bigger increase to 51.9.
The data did little to move the euro, however, "as traders remain focused on anaemic inflation trend and their implications for an expansion of ECB stimulus, which may be signalled as soon as this week," says Ilya Spivak, currency analyst at DailyFX.
The currency did experience some volatility in the wake of eurozone retail sales data. Retail sales growth dropped to 1.0% year-on-year in December, following November's downwardly revised 1.3% growth. Economists had expected growth in retail sales to ease more modestly to 1.5% in the final month of the year from the 1.6% growth originally reported in November.
The euro immediately drifted lower, before recovering somewhat, and is currently trading at USD1.3510 and CHF1.2223.
At the individual equity level, RSA Insurance Group, up 5.7%, is the FTSE 100's leading gainer. The troubled insurer's share price has jumped after it announced late on Tuesday that former Royal Bank of Scotland Group boss Stephen Hester, now seen as something of a turnaround expert, is its new chief executive.
Barclays raised its recommendation on the stock to Equal Weight from Underweight, saying that the appointment shifts the risk/reward profile of the company.
ARM Holdings, up 3.3%, is another big blue-chip winner. The stock is rebounding after falling sharply Tuesday after it reported slowing growth in its royalty revenues. Numis Securities raised the company to Hold, from Reduce, late Tuesday.
Hargreaves Lansdown, down 6.3%, is the index's biggest loser. Despite reporting record pretax profit and revenue for the half year, the stockbroker's shares have fallen after its Chief Executive Ian Gorham warned that if interest rates stay at historic lows, profits will continue to be hurt.
Additionally, while the company reported good growth, it has fallen slightly shy of consensus estimates by around 4%, said Shore Capital analyst Owen Jones.
GlaxoSmithKline is the main corporate event of the day, releasing its 2013 results at 1200 GMT.
Still to come in the data calendar Wednesday, US ADP employment change information is released at 1315 GMT, ahead of the US Markit services PMI reading for January at 1358 GMT. The Institute for Supply Management releases non-manufacturing PMI data at 1500 GMT.
The ISM reading is expected to rise to 53.7 in January, up from December's 53.0 figure.
However, ?the manufacturing component of the ISM survey registered on the soft side as we suspected earlier this week; US news-flow has increasingly softened relative to consensus forecasts over the past two weeks, opening the door for a similar result this time around," says Spivak.
?This may drive risk aversion amid fear of what a slowdown in US activity could mean for global performance at large," he adds.
Daniel Tarullo, member of the Board of Governors of the US Federal Reserve Board, gives a speech at 1500 GMT, ahead of Philadelphia Fed President Charles Plosser at 1730 GMT and Atlanta Fed President Dennis Lockhart at 1840 GMT.
By James Kemp; [email protected]; @jamespkemp
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