LONDON (SHARECAST) - - Markets look to FOMC with optimism
techMARK 1,987.43 +1.26%
FTSE 100 5,586.31 +1.73%
FTSE 250 10,870.93 +1.39%
- G20 meeting still ongoing, leaders pledge support
- Whitbread, Home Retail lead risers in London
Central bank stimulus speculation was doing the rounds today ahead of a key policy meeting in the US, fuelling a strong rise for the Footsie - the index finished at its highest level in over six weeks.
The Federal Open Market Committee (FOMC) convened today for a two-day meeting, with markets hoping that members will vote on further easing measures in light of recent mixed economic data and Eurozone concerns - the S&P 500 index rose to a one-month high after the opening bell in New York.
“It’s possible that the Federal Reserve will do something else,” market strategist David Kelly from JPMorgan Funds was quoted as saying this afternoon. “It’s possible that they will do some further extension of Operation Twist. They seem overly sensitive to the possibility that the market will react badly to them not taking action.”
The Office for National Statistics revealed today that UK inflation fell from 3.0% to 2.8% in May, under expectations and back within the government’s target level, prompting speculation that the Bank of England would soon ramp up its quantitative easing programme.
There were also rumours that the European Central Bank is considering pursuing a ‘Funding for Lending’ scheme for European banks similar to the action announced last week in the UK which offers lenders capital below market rates to lend to businesses.
Meanwhile, the Group of 20 (G20) summit in Los Cabos, Mexico, is still ongoing, yet a leaked draft communiqué said leaders have pledged to take “all necessary measures to safeguard the integrity and stability” of the Eurozone.
FTSE 100: Whitbread surges after ‘robust’ Q1
Forecast-beating like-for-like (LFL) sales growth in its first quarter saw shares of Whitbread jump today. The Premier Inn and Costa Coffee owner reported that LFL sales increased by 4.5%, better than expectations of a 3% improvement. Numis said that the numbers were very encouraging and thinks that “the business model is looking very robust".
Engineering group Weir was also making impressive gains after reiterating its full-year forecast at its capital markets presentation today. Jefferies has said that this implies the reconfirmation of the pre-tax profit guidance of £470m "which would in theory be equivalent to a 4% upgrade versus Bloomberg consensus forecasts".
Property firm Hammerson rose after announcing that it is set to off-load most of its London office space as it pushes forward with plans to focus solely on retail space. The company has exchanged contracts on the majority of its office portfolio with Brookfield Office Properties for £518m.
Consumer products and food groups were firmly out of favour today after France's Danone slashed its 2012 guidance on the back of the tough trading environment in Europe in the second quarter. Household cleaning and cosmetic firm Unilever was unwanted, along with sweeteners giant Tate & Lyle and breads manufacturer AB Foods.
FTSE 250: Home Retail rockets on Argos performance
Shares in Home Retail Group leapt after sales at its Argos division held up in the first quarter, delighting investors who expected them to be hit by bad weather. The stock jumped nearly 24% after Argos revenues came in at £819m for the quarter, down 0.2% on a like-for-like basis. The City consensus was for a 4% fall in like-for-like sales in the three months to the start of June after the wettest April in 100 years.
Fellow retailer Dixons was on the up after Bank of America upgraded the stock to 'neutral'.
Engineering and construction group Kentz rose strongly after it said it was on track to hit its revised targets as its backlog of work continued to grow.At the end of May 2012 that backlog had grown to $2.5bn, up from $2.46bn in April.
Military counter-measures specialist Chemring was a heavy faller after saying that global defence markets continue to be uncertain, with budget cuts in all NATO countries. Nevertheless, it remains confident of a strong second half and meeting full-year expectations.
FTSE 100 - Risers
Whitbread (WTB) 1,967.00p +6.38%
Eurasian Natural Resources Corp. (ENRC) 435.00p +5.05%
Weir Group (WEIR) 1,503.00p +4.59%
BG Group (BG.) 1,284.00p +4.31%
Wolseley (WOS) 2,322.00p +3.99%
Kingfisher (KGF) 284.00p +3.92%
Kazakhmys (KAZ) 743.00p +3.84%
Prudential (PRU) 731.00p +3.69%
IMI (IMI) 865.50p +3.65%
ARM Holdings (ARM) 508.00p +3.55%
FTSE 100 - Fallers
Tate & Lyle (TATE) 638.00p -1.31%
Morrison (Wm) Supermarkets (MRW) 276.30p -0.93%
Intertek Group (ITRK) 2,571.00p -0.92%
Diageo (DGE) 1,590.50p -0.72%
Fresnillo (FRES) 1,549.00p -0.58%
Unilever (ULVR) 2,075.00p -0.57%
Associated British Foods (ABF) 1,224.00p -0.41%
Polymetal International (POLY) 906.50p -0.33%
Rexam (REX) 407.50p +0.10%
Severn Trent (SVT) 1,749.00p +0.17%
FTSE 250 - Risers
Home Retail Group (HOME) 91.85p +23.54%
Dixons Retail (DXNS) 15.91p +16.99%
Kentz Corporation Ltd. (KENZ) 365.90p +12.58%
Carpetright (CPR) 728.50p +7.05%
Halma (HLMA) 400.40p +5.17%
Bwin.party Digital Entertainment (BPTY) 124.70p +4.88%
Essar Energy (ESSR) 120.10p +4.71%
Savills (SVS) 349.50p +4.70%
SEGRO (SGRO) 222.90p +4.31%
Ferrexpo (FXPO) 218.40p +4.05%
FTSE 250 - Fallers
Chemring Group (CHG) 293.50p -9.25%
Imagination Technologies Group (IMG) 456.90p -5.95%
Bumi (BUMI) 349.10p -2.70%
Domino Printing Sciences (DNO) 550.00p -2.65%
AZ Electronic Materials SA (DI) (AZEM) 290.80p -1.86%
Man Group (EMG) 73.10p -1.75%
Capital & Counties Properties (CAPC) 200.00p -1.67%
Interserve (IRV) 297.20p -1.49%
NMC Health (NMC) 199.70p -1.38%
Perform Group (PER) 373.00p -1.32%