16th Oct 2013 16:54
LONDON (Alliance News) - UK stocks closed mostly higher Wednesday, but are set to rise Thursday after the US Senate reached a deal after the London close to reopen the government and increase the country's debt limit into February.
US stocks have soared as US Senator Harry Reid confirmed that Senate Democratic and Republican leaders had reached a compromise deal which will mean the government is funded until January 15 and the debt ceiling extended to February 7. Senate Republican leader Mitch McConnell said the party was still determined to oppose Obamacare, but had put that to one side to agree the bipartisan last-minute fiscal deal.
London's main stock indices opened lower Wednesday, but the large- and mid-cap stocks closed higher on optimism US lawmakers would reach a deal. The FTSE 100 closed up 0.3% at 6,571.59, the FTSE 250 closed up 0.6% at 15,216.6, while the AIM All-Share closed close to flat at 790.59.
At the close of the UK equities markets, the DJIA was up 1.3% at 15,367.22, the S&P up 1.3% at 1,720.4, while the Nasdaq rose 1.1% at 3,836.67, having hit 3,840.47, a high for 2013, in early trading.
The news lifted the dollar and hit gold, with the yellow metal down 0.7% at USD1272.80 per ounce at the close of the London markets.
Royal Mail closed down for the first time since its listing Friday, but didn't much react to news that workers have voted to go on strike for 24 hours November 4 unless they get a better deal on pay, terms and conditions and job protection. Royal Mail said it would do everything it can to protect postal services. It has offered staff an 8.6% increase in pay, allowances and overtime payments over three years, plus a GBP300 lump sum in year one. It said employees who choose not to strike will get that lump sum in December.
The CWU union also threatened Royal Mail competitors UKMail Group and TNT UK, saying it would ballot members again for a mandate to boycott competitor mail.
The CWU had balloted 115,000 workers and said nearly 72,000 voted, with 78% voting for a strike and 22% against. Royal Mail pointed out that meant 51% of eligible workers had therefore either voted against action or abstained.
Royal Mail closed down 2.5% at 477 pence.
Hargreaves Lansdown, the stockbroker handling the retail element of the Royal Mail offering, closed up 4.8% at 1,090 pence, by far the biggest gainer on the blue-chip index. The company continued to climb after it Tuesday said its assets under management had risen 38% during its first quarter. Alongside this, first quarter revenue rose 13%, driven by the higher level of Vantage assets under administration compared to the same period in the previous year. It also said that the Royal Mail flotation, which occurred after the end of the quarter, had resulted in "immense" client participation. Hargreaves Chief Executive Ian Gorham said that although there was interest from existing clients, a "large proportion" of Royal Mail clients were new clients and also new investors, whom he expects Hargreaves to retain. Numis is confident that the company will continue to receive further strong dealing volumes in the second quarter.
ITV was also a big FTSE 100 winner after England beat Poland to reach the 2014 World Cup finals in Brazil, which the broadcaster will be covering. Liberum thinks that will mean ITV will achieve Liberum's 5.4% TV advertising growth forecast for 2014. Alongside this, Liberum is encouraged by the news that both Omnicom and Publicis have reported that their third-quarter organic revenue growth in the UK was over 7%, demonstrating that the market is in a strong condition. The brokerage expects ITV's third-quarter TV advertising revenue to grow by 11%-12%.
The pound rose in early London trade, reaching a weekly high of USD1.6058, after the number of people in the UK claiming job seeker's allowance plunged more than expected in September to the lowest since January 2009.
UK jobless claims declined 41,700 to 1.35 million, which was the lowest figure since January 2009, the Office for National Statistics reported. The decrease was sharper than the consensus of 25,000 drop. From September 2012, claims fell by 214,500. The unemployment rate came in at 7.7% of the economically active population during three months to August, in line with forecasts.
It slipped against the dollar following the news of the US debt deal, but not by a lot, and was trading at USD1.5918.
In the data calendar Thursday, UK retail sales data is expected at 0930 BST. A raft of US data is released at 1330 BST, including building permits, housing starts, and jobless claims. The Philadelphia Fed manufacturing survey is scheduled for 1500 BST.
The UK corporate calendar also looks more busy than of late, with earnings from BSkyB, and trading statements from Diageo, SABMiller and Man Group, among others.
By James Kemp; [email protected]; @jamespkemp
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