9th Apr 2014 09:41
LONDON (Alliance News) - UK stock indices are firmly higher Wednesday, with technology stocks rebounding from the heavy selling earlier in the week, while the pound remains strong as the UK reports its trade deficit narrowed slightly in February.
By mid-morning Wednesday the FTSE 100 has reversed all of Tuesday's losses to trade up 0.7% at 6,636.32. The FTSE 250, which fell particularly heavily on Tuesday, is up 0.9% at 16,160.95. The AIM All-Share is up 0.4 at 844.35.
Amid concern over the high multiples on which some momentum stocks trade not being supported by earnings, the technology sector has led indices lower in recent sessions. However, within the FTSE 350 sectors Wednesday, the Software & Computer Services sector is up 2.2%, the Technology Hardware & Equipment sector is up 2.3%, and the Electronic & Electrical Equipment sector is up 1.5%.
Industrial Metals is the biggest gaining sector however, up 4.8%, led higher by Evraz. The Russia-focused steel maker is leading the gainers in the FTSE 250, up 7.1% despite reporting a wider net loss for its 2013 full-year as cost cutting failed to offset a drop in revenues caused by a drop in steel prices. Evraz also noted the potential for disruption from geopolitical tensions in the region seeing as it also has operations in Ukraine. However, the steel makers reported earnings before interest, tax, depreciation and amortisation of USD1.82 billion were well in excess of the consensus estimate of USD1.06 billion.
Motor insurers are amongst the worst performers Wednesday after an industry index showed the cost of insurance continued to fall in the first quarter. The Confused.com/Towers Watson price index showed the cost of comprehensive cover fell by 7.5% in the first quarter, leaving rates down by 19% over the past twelve-months. "Good news for the consumer but grim reading indeed for the UK personal motor insurers," said Shore Capital analyst Eamonn Flanagan.
Esure Group leads the FTSE 250 fallers, down 7.9%, with Direct Line the second biggest faller, down 2.9%.
In an otherwise empty day for UK data, the latest numbers from the Office for National Statistics has shown the visible goods trade deficit in the UK is slightly smaller than expected, at GBP9.1 billion in February against the GBP9.2 billion expected. That also represents a narrowing of the deficit from GBP9.5 billion in January.
"Strong manufacturing growth and a recently improving trade balance hold out some hope that the UK economy will not suffer too much of a drag from net trade this year and next," said Berenberg chief UK economist Rob Wood.
The data did little to boost the pound, which was already trading at a one-month high against the dollar following Tuesday's strong UK manufacturing data. The pound has slipped very slightly against the dollar, along with the euro, ahead of the release of the US Federal Reserve policy meeting minutes later Wednesday. Currently the pound trades at USD1.6727 and the euro trades at USD1.3788.
Major European stock markets also are higher Wednesday, for the first time this week. The French CAC 40 is up 0.6%, and the German DAX 30 is up 0.5%.
The main market focus Wednesday remains the release of the Fed minutes at 1800 GMT. Ahead of that the futures markets indicate a higher open on Wall Street, with major markets currently set to open about 0.2% higher.
By Jon Darby; [email protected]; @jondarby100
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