18th Oct 2013 09:47
LONDON (Alliance News) - UK stocks are higher Friday, buoyed by the acceleration of Chinese growth and the resolution, even if temporarily, of US debt-ceiling concerns.
China's economic growth rebounded to 7.8% year-on-year in the third quarter of this year, after slowing to 7.5% in the second quarter, the National Bureau of Statistics reported Friday. Unless there are unexpected problems in the fourth quarter, the figures mean that the Chinese government will hit its growth target of 7.5% for the year, as growth for the first nine months came in at 7.7%.
The positive Chinese data led to a positive open for UK equities. By mid-morning Friday the FTSE 100 is up 0.3% at 6,594.25, and the FTSE 250 is up 0.5% at 15,310.24. The AIM All-Share climbed to a new 2013 high of 797.70 in morning trade, currently trading just off that high.
Equity moves are back to being driven by company fundamentals Friday. Although very few investors actually believed the US would default on its debt, the imminent possibility distracted market attention. "The sentiment in the market today is one of mild relief and back to business as usual", comments Spreadex trader Davis White. "Now the market is getting back to pricing in future value and observing performance," White says.
William Hill is the most notable blue-chip loser. Shares are down 2.9% after the bookmaker received a ratings downgrade from JPMorgan Cazenove to Underweight from Overweight. The shift of online gambling to mobile presents a problem of how to cross-sell from sports to gaming, says JPMorgan, given mobile-gaming development is well behind mobile sportsbook development. JP Morgan also suggests the sector is becoming increasingly competitive and, although it sees long term potential, has reduced William Hill's price target to 400p, from 550p, a huge 27% decrease.
Anglo American shares are also lower Friday. The global metals and minerals giant is down 2% after saying that iron-ore production at its key Kumba site in South Africa decreased by 24% to 9.47 million tonnes for the three months ended September 30, compared to last year's 12.50 million tonnes.
Other stocks on the move following broker re-ratings include Whitbread, up 1.3% after a price target increase to 3,800p from Exane BNP, and United Utilities, up 0.7% after being raised to Neutral from Underperform by Credit Suisse.
After a huge gain of about 3% on Thursday, gold is currently trading at USD1,316.50 and is holding on to its new strength. The dollar remains suppressed by the expectation of continued quantitative easing from the Federal Reserve. Given the estimated economic impact of the US shutdown and the possibility of another round of political squabbling over the debt ceiling come th new February deadline, some economists are beginning to forecast that tapering will not start until well into 2014.
The pound is testing upside resistance at 1.62, currently trading USD1.6192, while the euro trades at USD1.3686. The euro made its 2013 high on February 1, at 1.3711. A break of that level would be a new high for the euro since November 2011.
An empty day in the data calendar suggests a quiet Friday ahead, although interest may be provided by the US market open.
With US federal employees now returning to work, the market anticipates the release of official data that had been postponed by the shutdown. The hugely missed September non-farm payroll reading has been re-scheduled for release on Tuesday next week.
By Jon Darby; [email protected]; @jondarby100
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Anglo AmericanWMH.LWhitbreadUnited Utilities