15.15: The Footsie maintained its strong return from the long Easter break in late afternoon trading as US stocks pushed higher in early deals, continuing to be bolstered by expectations that US interest rates will not rise until later this year.
With an hour and a quarter of trading to go in London, the FTSE 100 index was 112.7 points, or 1.7 per cent higher at 6,945.9, just below the session peak of 6,951.42.
In early trade on Wall Street, the blue chip Dow Jones Industrial Average gained 63.1 points to 17,944.0 while the broader S&P 500 index was up 4.6 points at 2,085.2, and the tech-laden Nasdaq Composite added 18.9 points at 4,936.2.
Buoyant markets: US stocks extended Monday’s strong gains on hopes that Friday’s weak jobs report could mean a slower pace of rate rises by the Federal Reserve than previously expected
US stocks extended Monday’s strong gains on hopes that Friday’s weak jobs report could mean a slower pace of rate rises by the Federal Reserve than previously expected.
New York Federal Reserve president William Dudley also provided a lift as he reiterated on Monday that any decision to hike interest rates will be data dependent.
Jasper Lawler, market analyst at CMC Markets said: ‘Estimates for the timing of the first US rate-hike have been pared back after the disappointing non-farm payrolls report over Easter.
But he added: ‘Loose monetary policy is not enough by itself to drive stock market returns; there needs to demonstrable evidence of its effectiveness through earnings growth in top-flight US companies.’
No important US data was released today, and earnings news was thin on the ground, although there was a boost from takeover moves, with shares in FedEx jumping nearly 4 per cent after the parcels delivery giant said it would buy Dutch logistics company TNT Express for $ 4.8billion (£3.2billion).
13.10: The Footsie remained sharply higher at lunchtime headed by resurgent oil stocks thanks to higher oil prices and expectations that US interest rates will not rise until later this year.
By mid session, the FTSE 100 index was up 98.9 points, or 1.5 per cent at 6,932.4, rebounding from recent falls as traders returned from the long Easter weekend hoping that last Friday’s lacklustre US jobs data could mean that the Federal Reserve has more time before hiking interest rates.
Craig Erlam, market analyst at Oanada said: ‘Once again we’re seeing negative economic reports getting the thumbs up from investors as they’re seen to support a delay in the timing of the first rate hike, which would be positive for equity markets.’
Oil boost: Heavyweight energy stocks were buoyant today after the price of Brent crude climbed strongly yesterday, and although it eased back a bit today it still held above $ 57 a barrel
He added: ‘‘US futures are currently taking no lead from Europe, pointing to a flat open shortly before the opening bell on Wall Street. Traders in the US had the opportunity to respond to the non-farm payrolls figure yesterday and appear to have ignored the improvement in wage growth, despite the Fed’s constant reminders that wage growth and inflation remains its primary concerns.‘
On currency markets, the pound remained slightly lower against the dollar at $ 1.49, but firmed a cent against the euro, at €1.37, after data today from Markit showed that Britain’s powerhouse services sector grew at its fastest pace in seven months in March.
Among buoyant energy stocks, BG Group rose almost 5 per cent or 39.2p to 892p and Royal Dutch Shell gained 62p to 2,188.5p after the price of Brent crude climbed strongly yesterday, and although it eased back a bit today it still held above $ 57 a barrel.
Today’s dip came as Goldman Sachs warned that oil prices are set to remain low for the foreseeable future. Although the broker added that there was a ‘modest upside’ to its forecast, which means prices could be higher than expected.
Mining stocks were also among the best blue chips performers. Rio Tinto stood out, up 79p at 2,830p after completing a bigger-than-expected off-market share buyback due to strong demand.
Rio was also wanted as press reports revived talk that commodities trader Glencore might renew its bid interest in the group. Glencore shares gained 6.85p at 287.6p.
Chilean copper miner Antofagasta also found gains, up 15.5p to 733.5p after broker Jefferies repeated a buy rating on the stock, with a 900p price target.
Away from commodities, broadcaster ITV added 2.7p to 253.7p after it was reported to be in talks to buy the TV division of the Weinstein Company, the Hollywood production house behind The Imitation Game and The King’s Speech, for as much as $ 950million (£640million).
The unit, which has produced the designer reality show Project Runway as well as Mob Wives, said it has 17 TV series in various stages of development.
Telecoms giant Vodafone was also on the rise, up 2.6p to 224.8p after broker UBS highlighted the possibility of a bid from US cable operator Liberty Global.
And Royal Mail added 5.9p to 448.3p after further consolidation in the parcels sector saw Dutch firm TNT Express agree a £3.2 billion takeover by FedEx.
On the blue chip fallers board, discount airline easyJet dropped 3p to 1,841p, while British Airways-owner International Airlines Group fell 8.75p to 589.75p as a result of the recent hike in oil prices.
IAG was also knocked by a downgrade in rating to neutral by JPMorgan Cazenove in a sector review.
But recently-listed Wizz Air lifted almost 4 per cent, or 40p to 1465p after JPMorgan began coverage of the Eastern European airline with an overweight rating, highlighting its robust growth outlook compared with other low cost carriers in Western Europe.
10.15: The Footsie extended its gains as the morning session progressed, led by strength in energy stocks thanks to higher oil prices and by expectations that US interest rates will not rise until later this year.
By mid morning, the FTSE 100 Index was up 83.1 points, or 1.2 per cent to 6,916.5, building on Thursday’s gains following the long Easter holiday break, and catching up with strong advances by US and Asian stocks after Friday’s weak US jobs report hit Federal Reserve rate hike expectations.
Last week’s figures showed that US non-farm payrolls totalled just 126,000 in March, slightly over half the 245,000 expected by analysts.
Turbulence British Airways-owner International Airlines Group fell after a recent hike in oil prices, also blighted by a downgrade in rating from broker JPMorgan Cazenove to neutral from overweight in a sector review
The data prompted Atlanta Federal Reserve president Dennis Lockhart to call for a rate hike at policy meetings in either July or September, as opposed to June as the market currently expects.
And the mood was also helped by comments from Federal Reserve policymaker William Dudley, who said that US rate increases will be ‘shallow’.
European markets also saw strong gains today, with the CAC 40 index in Paris ahead 1.2 per cent and Frankfurt’s Dax 30 index up 0.9 per cent as worries over the Greek debt situation eased.
International Monetary Fund managing director Christine Lagarde said she had received confirmation by Greece that it would repay an outstanding €450million to the IMF this week.
On currency markets, the pound rose to a day’s high against the euro at €1.3714 after data showed Britain’s dominant services sector growing strongly in March. Against the dollar, the pound rose briefly above $ 1.49 after the data before easing back to $ 1.4874, flat on the day.
The Markit/CIPS services purchasing managers’ index staged its biggest gain in more than a year to hit an eight-month high of 58.9 in March. The index had stood at 56.7 in February.
Chris Williamson, chief economist at Markit said: ‘Faster growth of new business and improved expectations of prospects for the year ahead also bode well for the upturn to retain strong momentum as we move through the spring.’
Britain’s gross domestic product probably rose by a quarterly 0.7 per cent in the first three months of 2015 — up from 0.6 per cent growth late last year, Williamson said. That forecast matched one from the CBI published earlier today.
In other economic news, minutes from the BoE’s Financial Policy Committee meeting on March 24 showed members were worried that Britain’s large current account deficit could damage market sentiment towards the country if the economic environment deteriorates.
Among energy stocks, BG Group rose 3 per cent or 26.75p to 879.65p and Royal Dutch Shell improved 52p to 2,178.5p after the price of Brent crude climbed to $ 57 a barrel.
Oil explorer Tullow Oil – which was recently demoted from the blue chips – was up 4.6 per cent or 13.1p to 297.8p.
Mining were also higher as the price of copper climbed higher, with BHP Billiton up 17.5p to 1,449p, and Rio Tinto ahead 56.5p to 2,807.5p.
Other blue-chip risers included Royal Mail, which climbed 3.9p higher to 446.3p after further consolidation in the parcels sector saw Dutch firm TNT Express agree a £3.2billion takeover by US giant FedEx.
And retailer M&S gained 9.5p at 565.3p as broker continued to react positively to last week’s upbeat trading statement, with a number hiking their target prices for the high street firm and SocGen raising its rating to buy.
But on the fallers board, British Airways-owner International Airlines Group fell 8.25p to 590.25p and easyJet dropped 7.5p to 1,836.5p as a result of the recent hike in oil prices.
IAG was also blighted by a downgrade in rating from broker JPMorgan Cazenove to neutral from overweight in a sector review, which was negative on the legacy carriers but positive on discount airlines.
JPMorgan raised its target price for easyJet – which issues a trading update tomorrow – and upgraded its stance for Irish rival Ryanair to overweight from neutral.
Ryanair shares gained 0.14p at 11.0p, also lifted by another bumper month for growth in traffic. The airline said it carried 6.7million passengers last month, up from 5.2 million during the same period in 2014.
Regional airline Flybe also bucked the trend in the airline sector after a reassuring trading update included an upbeat assessment on demand for summer flights.
The Exeter-based carrier said it would break even in the year just ended, a performance in line with the company’s profit warning in January. Flybe shares added 0.5p at 58p.
08:30: The Footsie bounced higher in early trading, returning from the long Easter break as investors digested last Friday’s weaker-than-expected US jobs report which has heightened hopes that the Federal Reserve will put off making its first interest rate hike in nearly a decade.
In opening deals, the FTSE 100 index rose 78.1 points to 6,911.4 points, having closed up 23.9 points last Thursday before the Easter holiday break.
European markets were also higher, with the Dax 30 index in Frankfurt increasing 0.7 per cent, and Paris’s CAC 40 index gaining 0.8 per cent as Greek debt fears eased. Greece’s Finance Minister Yanis Varoufakis has said his country intends to meet all obligations to all its creditors ahead of a big loan payment due to the IMF later this week.
M&A: US delivery giant FedEx is seeking to takeover Dutch rival TNT Express for £3.2billion
US stocks were higher overnight, carrying over Friday’s gains after the weak jobs data raised expectations that the Federal Reserve will wait longer before raising interest rates.
According to analysts the data makes a summer interest rate hike unlikely and this was reiterated by New York Fed president William Dudley in a speech in New Jersey yesterday.
Federal Reserve Bank of Atlanta President Dennis Lockhart followed Dudley’s comments, stating that while recent economic weakness probably won’t persist, he favors pushing out the central bank’s first rate increase beyond the next two meetings.
He said: ‘I would probably be biased toward the July or September dates as opposed to June,’
‘We will have more data and we will give the economy a little more time to prove out the thesis that I laid out, that the first quarter was anomalous again, just like a year ago.’
Overnight Asian stocks rose tracking Wall Street’s lead, with the major news being that the Reserve Bank of Australia had pegged interest rates at record low 2.25 per cent.
There is little important data due out today, although the latest March PMI readings for the UK and the eurozone will be of interest.
The UK PMI services data is expected to show expansion from 56.7 to 57.1 – convenient timing for the Conservative party which is running its current election campaign on the strength of the UK economy.
Helping this viewpoint, was a Confederation of British Industry’s report on the first quarter which estimated that the UK economy expanded by 0.7 per cent in the three months to March, up from 0.6 per cent in the previous quarter.
Meanwhile report on the March meeting of the Bank of England Financial Policy Committee will also be released this morning.
Oil is proving volatile once again with Brent crude falling more than 1 per cent this morning, paring back overnight gains of nearly 6 per cent, after broker Goldman Sachs said prices needed to remain low for months to achieve a slowdown in US output growth.
Last week traders were worried about a flood of Iranian oil onto the market suppressing prices further but this has so far failed to challenge confidence that supply and demand are entering a phase of re-balance.
On the corporate front, US delivery giant FedEx is seeking to takeover Dutch rival TNT Express for £3.2billion as it looks to expand its European operations. The move boosted shares in Royal Mail over 2 per cent higher.
Stocks to watch:
SHIRE – The pharmaceuticals firm has agreed with US regulators the steps it would take to submit a candidate drug to treat hyperactivity in adults for clearance.
RYANAIR – The Irish airline has reported a rise in March passenger traffic. JPMorgan Cazenove has upgraded its rating for Ryanair, and downgraded its stance on IAG in a sector review.
FLYBE – The discount airline said it expected its annual results to meet market expectations.
VEDANTA – Cairn India – a unit of the London-listed resources group – said it has moved the Delhi High Court against a $ 3.3billion tax demand from Indian authorities related to its listing in 2007.
GLENCORE/RIO TINTO – The commodities trader could launch a new bid for rival Rio Tinto, according to press reports.
BHP BILLITON /RIO TINTO – Australia is pursuing the two global miners for shifting billions of dollars in iron ore profits through marketing hubs in Singapore that pay almost no tax, the Australian Financial Review said.