London Rallies as Sentiment Improves

Ivaylo
24 Jan, 2007
New York City

The UK market surged by mid-day on Wednesday, as hopes of near-term interest rate hikes abated. The market sentiment improved markedly after news that the monetary policy committee of the Bank of England voted in favour of surprise rate hike in January by a slim margin, raising expectations that the end of its rate tightening cycle is near. Banks, miners, metal stocks were boosted by the news. The FTSE 100 was 0.8% higher at 6,275.6, an increase of 48 points.

[R]9:30AM NY-2:30PM London FTSE gains Wednesday on upbeat market sentiment.[/R]
The FTSE 100 in London gained 0.8% at 6,275.6, an increase of 48 points.

Advancers

Northern Rock was 2.5% higher on reports of a better-than-expected full year profit. Bradford & Bingley added 0.6%, and Barclays made gains of 0.6%, while HBOS was 1.2% higher.

Kazakhmys was the top advancers among miners after analysts at HSBC lifted the rating on the stock to neutral from underweight. Stronger metals prices on commodities markets brought the rest of the sector back into positive territory. Antofagasta was 1.6 % higher, Xstrata made gains of 2.5% and Rio Tinto was 2% higher.

Expectations of stronger demand for electricity and gas supported utilities. Drax, the electricity company, was 1.7% higher, Scottish & Southern Energy gained 1.3% and National Grid advanced 1.6%. BG Group added 2%. United Utilities, the water company based in the north west of England, climbed 2.4% after JP Morgan upped its rating on the stock to overweight from neutral .

JD Wetherspoon rose 2.7% after it posted a 5.5 % increase in same-store sales. Punch Taverns gained 0.7 % after it said the same-store sales in its core chain continued to rise.

Decliners

Chemists group Alliance Boots fell 0.8 % after Morgan Stanley reduced its rating on the stock to underweight from equalweight. Capita Group, the outsourcing company, lost 0.5 % after Deutsche Bank lowered its rating on the stock to hold from buy.

There were losses for BSkyB ahead of its Q2 subscriber numbers due next week. The company slipped 0.2 % on a potential mixed report from the pay TV broadcaster, which has suffered from slower growth.

[R]7:30 AM Asian markets rallied Wednesday with Tokyo near six-year record.[/R]
Asian markets ended higher on Wednesday. Nikkei 225 Index in Japan closed up 0.6% at 17,507.40. Shares of Toyota gained 2% and Canon shares advanced 1.2%. Among domestic-related issues, Nippon Steel added 1.3% while consumer-focused lender Aiful put up 1.8%. Kawasaki Kisen Kaisha Ltd was up 7.7% and Mitsui OKS Lines Ltd rose 4%. The largest oil producer in Japan, Inpex Holdings advanced 2.4%.

Hong Kong Hang Seng Index advanced 0.7% to 20,912.23. The Hang Seng China Enterprises Index gained 0.9% to 10,033.59. Shares of China Mobile surged 3.8%, jumping sharply for a second day in a row after Merrill Lynch earlier raised its price target on the share. Ping An Insurance gained among mainland insurance companies, with shares up 2.5%.

Australian S&P/ASX 200 settled up 0.4% with Woodside Petroleum adding 1.2%. Singapore Straits Times Index edged up 0.6% and Weighted Price Index in Taiwan rose 0.8%. Malaysia Composite Index added 0.8%, while Thai SET index increased 0.9%. Indonesian Jakarta Composite Index was the only one to buck the trend, declining 0.1%. New Zealand NZSX-50 rose 0.1%.

[R]6:30 AM Europe was higher Wednesday on oil and banking stocks upmove.[/R]
European markets gained on Wednesday. In early trade, FTSE 100 in London climbed 0.6% to 6,262.4, Frankfurt Xetra Dax added 0.3% to 6,696.07, and the CAC 40 in Paris gained 0.5% to 5,605.1.

Advancers

Shares in HVB gained 5.8% and Bank Austria added 5.5 % after Unicredit, which owns 95 % in both businesses, announced it was to buy out the remaining shares in the two banks. Italian banks were higher following upgrades to the sector late on Tuesday by Morgan Stanley. Banca Monte dei Paschi di Siena edged 0.3% higher, while Capitalia edged up 0.5% after the broker raised its rating from underweight to equal weight.

Crude prices surged overnight after the US announced it would double the capacity of its emergency reserves stockpile. European oil producers all benefited. Total of France gained 1%, Cepsa of Spain notched up 1.9% and Statoil of Norway rose 2%. BP advanced 1.2% and miner Vedanta Resources gained 2%.

Decliners

SAP shares declined 5.4% after it announced that its 2007 operating margins would fall. The company posted Q4 profit and sales figures matching its warning from a few weeks ago, with net income up 29% and revenue up 7%.

Oil and gold

Crude oil for March delivery dropped 59 cents, or 1.1%, to $54.45 a barrel in after-hours electronic trading on the New York Mercantile Exchange, as a government report today may show commercial stockpiles advanced for a second week. It traded at $54.50 in early trade in London. Gold traded in London at $643.00 per troy ounce, down from $645.12 late Tuesday.

Currencies

The dollar was mostly higher against other major currencies in European trading Wednesday morning. The euro was at $1.3002, down from $1.3021 late Tuesday. The British pound was quoted at $1.9760, down from $1.9825. The dollar bought 121.44 Japanese yen, down from 121.64.

[R]5:00 AM Gold surges Tuesday on skidding dollar and Bolovian intentions.[/R]
February gold ended up $11.80 at $645.90 a troy ounce on the New York Mercantile Exchange and March silver also closed up 26 cents at $13.26 an ounce. The most active March copper advanced 5 cents to settle at $2.5795 per pound. April platinum was up $18.10 at $1,183.20 an ounce, while March palladium traded to its highest level in more than four months at $353.50 and finished at $350.35, up $3.65 an ounce.

The March crude oil contract surged $2.57 to a high of $55.15 a barrel before pulling back. The contract ended $2.46 higher at $55.04 a barrel. February gasoline added 7.19 cents to finish at $1.4473 a gallon, while February heating oil settled up 6.79 cents at $1.5763 a gallon. February natural gas gained 27.8 cents to end at $7.597 per million British thermal units.

On the New York Board of Trade, the March Arabica coffee futures declined 1.70 cents at to close at $1.1565 a pound, while the May futures fell 1.70 cents to $1.1885. Futures on raw sugar in foreign ports for March finished 0.14 cent lower at 10.79 cents a pound.