11th Sep 2013 16:26
LONDON (Alliance News) - The UK's blue-chip and mid-cap stock indices closed little changed on Wednesday, while small-cap indices continued to soar, and the pound rose to its highest level for many months against the dollar and euro after UK jobless figures came in much higher than expected, raising expectations of early interest rate rises.
The FTSE 100 closed down 0.1% at 6,571.77, the FTSE 250 down 0.2% at 15,245.78, while the AIM All-Share index ended up 1% at another yearly high of 781.39. The FTSE Smallcap index hit its highest level for nearly 16 years as small stocks continued to drive higher on the back of the improving economy that is lifting earnings and driving more positive news at smaller British companies.
The larger indexes were little changed over the course of the day. After convincing gains on all major stock indices and a heavy drop in the price of oil Tuesday as a potential diplomatic solution was tabled on Syria, markets went into wait-and-see mode Thursday after Obama asked Congress to delay a vote on military action until the diplomatic options have been fully explored.
The pound was the big moved of the day, hitting a seven-month high against the dollar and eight-month high against the euro as the rate of unemployment in the UK dropped to 7.7% between May and July, from 7.8% in the previous three months. The number of people unemployed fell 24,000 in the period to 2.49 million, beating expectations, while the number of people claiming Jobseekers' Allowance fell 32,600 to 1.4 million, its lowest level since February 2009.
Every drop in unemployment is being taken as a step closer to Bank of England rate increases. The bank said it will review rates when unemployment drops to 7% and thinks that won't happen for three years, but markets are pricing in a much earlier move.
ARM Holdings finished at the top of the FTSE 100 gainers on the back of Apple's unveiling of its new iPhone models Tuesday night. The new handsets use a processor designed by the British company. The launch has not gone so well for the US tech giant, however, with USD20 billion wiped off the company's value since New York markets opened, the stock down more than 4%, as investors seem disappointed with the new offerings.
In the data calender Thursday morning are EU industrial production numbers as well as a round of inflation data, with CPI index readings due from France, Italy and Ireland. There are jobless claims numbers from the US in the afternoon, after which thoughts will likely turn back to the federal reserve and possible tapering of QE at the next FOMC meeting, being held September 17-18.
Retailers William Morrison, Next and Dunelm Group report results Thursday, while Home Retail and Ocado give interim management statements.
By Jon Darby; [email protected]; @jondarby100
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