LONDON.The Footsie finished near its intraday highs, as it jumped back towards the 5,100 level, after a modest start on Wall Street. Global sentiment was lifted last night after on the back of comments from the European commissioner for economic and monetary affairs.
In an interview with the Financial Times, Olli Rehn said, “There is an increasingly shared view that we need a concerted, co-ordinated approach in Europe while many of the elements are done in the member states…Capital positions of European banks must be reinforced to provide additional safety margins and thus reduce uncertainty…This should be regarded as an integral part of the EU’s comprehensive strategy to restore confidence and overcome the crisis.” However, a spokesman for Rehn, Amadeu Altafaj, told Bloomberg that the Economics Commissioner was not speaking of a “concrete plan” last night but rather “of an initiative, of discussions in progress and he pleads for a European approach.”
Nevertheless, the comments spurred a comeback for global stock markets on Wednesday with bourses across Europe making huge gains of 3-4%.
In London, the miners – sensitive to swings in the global economic outlook – were among the best performers. Vedanta Resources, Xstrata, Kazakhmys, Rio Tinto and BHP Billiton registered gains of at around 7-8%.
Investors seemingly shrugged off the news that Moody’s had downgraded Italy’s credit rating by three notches and gave a negative outlook. Among the drivers for the downgrade is the increased long-term funding risks for highly indebted countries in the Eurozone “as a result of the sustained and non-cyclical erosion of confidence in the wholesale finance environment for euro sovereigns, due to the current sovereign debt crisis,” Moody’s said.
Also not causing too much of a worry was UK gross domestic product figures which came in below expectations for the second quarter. The Office for National Statistics revised its growth forecasts down to 0.1% month-on-month, which will be disappointing to many who were expecting the rate of growth to remain unrevised at 0.2%. This means that second quarter GDP was 0.6% higher than the same period in 2010, down from initial forecasts of a 0.7% improvement.
SUPERMARKETS SOLID, BUT TROUBLES ON THE HIGH STREET
In company movements, the retailers were in focus today with some big names reporting their figures.
Despite falling early on, Tesco rose higher. While like-for-like (LFL) sales (excluding VAT and petrol) fell by 0.5% in the first half, total sales grew by 8.8%. Rival supermarket Sainsbury made good gains after announcing that revenues grew 7.6% in the first half, as sales growth accelerated in the second quarter.
On the FTSE 250, however, the retailers disappointed. High street baby clothes retailer Mothercare lost more than a third of its market value on news of a 9.6% decline in like-for-like sales in the UK in the last quarter.
Trendy fashion retailer SuperGroup saw its share price plummet over a quarter after revealing a major problem at its new Barnwood warehouse in
Gloucestershire, which it estimates will cut profits by £6-9m this year. Out-of-town homewares retailer Dunelm fell after seeing like-for-like sales fall by 2% in the first quarter.
chocolate maker Thorntons also was out of favour after sales dropped 7.6% in the 14 weeks to 1 October, owing to the tough current retail environment.
Other retailing heavyweights also fell, with Next, Kingfisher and Marks & Spencer among the worst performers of the day on the FTSE 100.
UK services purchasing managers’ index rose from 51.1 to 52.9 last month, as growth in the services sector beat expectations.
The British Retail Consortium (BRC) shop price index for the month of September has come in at 2.7% on year, the same as the month
before. The Eurozone purchasing managers index for the month of September has come in at 48.8, below the ‘flash’ estimate of 49.1, according to
FTSE 100 – Risers
Vedanta Resources (VED) 1,029.00p +8.54%
Wolseley (WOS) 1,640.00p +8.18%
Barclays (BARC) 155.45p +7.69%
Aviva (AV.) 295.60p +7.37%
Kazakhmys (KAZ) 782.50p +7.19%
Rio Tinto (RIO) 2,905.50p +7.12%
Xstrata (XTA) 818.20p +7.09%
IMI (IMI) 681.00p +6.99%
Eurasian Natural Resources Corp. (ENRC) 557.50p +6.80%
Legal & General Group (LGEN) 95.90p +6.79%
FTSE 100 – Fallers
Inmarsat (ISAT) 444.90p -6.02%
Next (NXT) 2,447.00p -2.28%
Kingfisher (KGF) 234.90p -2.12%
Marks & Spencer Group (MKS) 308.80p
Associated British Foods (ABF) 1,086.00p -1.27%
International Power (IPR) 308.70p -1.18%
United Utilities Group (UU.) 614.00p -1.13%
Imperial Tobacco Group (IMT) 2,125.00p -0.70%
Severn Trent (SVT) 1,521.00p -0.59%
Autonomy Corporation (AU.) 2,550.00p 0.00%