15th Nov 2013 10:47
LONDON (Alliance News) - UK stocks trade marginally higher Friday, following Federal Reserve Chairwoman Janet Yellen's dovish comments Thursday, but UK and European investors refuse to be swept up in the euphoria.
"Rampant Chinese equity markets and a strong Asian session has not been sufficient to pull European stocks higher this morning, remaining broadly flat as we head for the weekend," says Toby Morris, senior sales trader at CMC Markets.
US and Asian were boosted Thursday as the incoming Fed chair said that US unemployment levels are currently too high for the Fed to start to roll-back its USD85 billion-a-month bond buying stimulus, indicating that the central bank will ensure the continued availability of cheap money.
However, "even the robust testimony and Q&A by Yellen, with clear message that she sees quantitative easing needed for longer, benefits outweighing costs and no asset bubbles in sight, which helped US markets move to new highs last night, has failed to see the UK flagship follow suit," says Michael van Dulken, head of research at Accendo Markets.
By mid-morning Friday, the FTSE 100 is up 0.3% at 6,687.45, the FTSE 250 is up 0.1% at 15,273.36, the AIM All-Share is up 0.2% 810.92, while both the French CAC and German DAX are 0.1% lower. The Nikkei has closed 2% higher with the Hang Seng up 1.7%.
"It certainly does not paint a picture of near all-time highs right now, and seems to be dulling the effects of taper fueled positive US moves with the divergence between Europe and the US widening," adds Morris.
The latest inflation data from the EU for October just released slowed to 0.7% in October, as initially estimated, from 1.1% in September, a report from Eurostat showed Friday. The rate was the lowest since November 2009. Moreover, it has remained below the European Central Bank's target of "below, but close to 2 percent" for the ninth month in a row.
Month-on-month, consumer prices were down 0.1% in October, the statistical office said, from a rise of 0.5% previously, in line with expectations.
At the individual UK stock level, blue-chip Vedanta Resources, down 4.3%, is a big faller. The India-focused miner reported a plunge in pretax profit for the first half of the year, falling to USD261.1 million from USD1.07 billion in the previous year. Revenue declined 17% to USD6.16 billion from last year's USD7.45 billion. During the period, average prices received by Vedanta fell 9% for copper, 7% for aluminium and 3% for zinc, while average Brent oil prices were down 2%.
Ultra Electronics Holdings is the biggest faller on the FTSE 250, down 5.8%. The defence, security, transport and energy group warned that it has been hit by the US government shutdown and a general slowdown in government spending in that market. It said the US shutdown delayed expected orders, approvals and payments, while many of the contracts it has won are still being funded incrementally. It also warned that it is continuing to experience delays on a contract in Oman, which means that it will now not be able to install its products until next year rather than in the fourth quarter.
At the other end of the spectrum, Genus, up 5%, is the index's leading riser. The animal genetics company's revenues and volumes have risen in recent months as its customers saw pork and beef prices rise and feed costs fall. The company said volumes of both products and services were up 5% between July 1 and November 14, with revenues up by the same amount at constant currencies. Additionally, Genus acquired Génétiporc's business in North America and Mexico in October, and said it was pleased with the initial reaction of customers and with the progress of integration.
Still to come in the data calendar Friday, US industrial production figures are released at 1415.
By James Kemp; [email protected]; @jamespkemp
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