Date: Tuesday 22 May 2012
- Market Movers
- techMARK 1,919.55 +0.85%
- FTSE 100 5,345.55 +0.77%
- FTSE 250 10,521.14 +0.82%
LONDON (ShareCast) - - Miners wanted on Chinese stimulus speculation
- Fitch downgrades Japanese rating
- Markets await EU summit tomorrow, OECD backs eurobonds
The FTSE 100 held on to its earlier gains by Tuesday lunchtime as investors look ahead to tomorrow's EU summit with optimism, as pressure builds on Eurozone leaders to take action to stem the debt crisis.
The European Council is holding an informal dinner tomorrow where the members are expected to discuss both situation in Greece and measures to increase growth. French President François Hollande is expected to press German Chancellor Angela Merkel for the implementation of the so-called eurobonds (debt issued and backed by the entire Eurozone together).
The Organization for Economic Co-operation & Development (OECD) has today backed Hollande's call for eurobonds as additional measures towards the establishment of a 'growth compact are needed to combat the impact of austerity.
Equity markets gave a rather muted reaction to the news that Fitch Ratings downgraded its rating for Japan from AA to A+, issuing a negative outlook in response to increasing public debt levels. Japan's gross general government debt is projected to hit 239% of gross domestic product (GDP) by the end of the year, "by far the highest for any Fitch-rated sovereign", the ratings agency said.
"The downgrades and negative outlooks reflect growing risks for Japan's sovereign credit profile as a result of high and rising public debt ratios," said Fitch's head of Asia-Pacific Sovereigns, Andrew Colquhoun. "The country's fiscal consolidation plan looks leisurely relative even to other fiscally-challenged high-income countries, and implementation is subject to political risk," he said.
In domestic news, UK price rises slowed faster than expected in April pushing the inflation rate down to 3%, the lowest it has been in two years. Analysts had expected the Consumer Prices Index to fall to 3.1%, from 3.5% in March and said that the bigger fall would encourage the Bank of England to increase its £325bn stimulus programme.
FTSE 100: Miners rise on Chinese stimulus hopes
Miners were performing well after the China Securities Journal said that the world's second-largest economy might speed up approvals for infrastructure investment to counteract a slowdown. The report said that the government has asked for project proposals by the summer instead of the end of the year in an effort to stimulate the Chinese economy. Antofagasta, Rio Tinto, Polymetal and Fresnillo were among the best performers by midday.
Mobile phone networks giant Vodafone was in demand after saying it is expecting underlying growth in adjusted operating profit and stability in free cash flow in the current financial year. In the year just gone (ending March 31st), group revenue rose 1.2% from a year earlier to £46.4bn, slightly ahead of forecasts of £46.3bn.
High Street giant Marks and Spencer rose early on despite seeing profits drop by 15.7% in the year ended March 31st while slashing its short-term sales growth targets. Nevertheless, the full-year dividend was maintained at 17p per share with Chief Executive Marc Bolland saying that the company "performed well in a challenging economic environment".
Defensive stocks were out of favour as increased risk appetite benefited the mining and financial sectors. Supermarket peers Morrison and Tesco were in the red, joined by real estate investment trusts British Land and Land Securities, and drugs giant AstraZeneca.
FTSE 250: HomeServe plummets on FSA probe news
HomeServe, the home emergency insurance and repairs group, saw shares lose a quarter of their price after the group said that it was facing an investigation by the Financial Services Authority over 'certain historic issues'. The firm has had a torrid year that saw it temporarily suspend its UK sales and marketing activity in October after evidence emerged that some customers did not understand what they were buying.
Intermediate Capital, the mezzanine financing company, surge after hiking its dividend and growing profits despite strong Eurozone headwinds. Adjusted profits before tax in the 12 months to the end of March were £198.8m compared to £190.1m in the prior year.
Defence technology group Cobham rose after extending the offer period for shareholders in Danish satellite communications outfit Thrane and Thrane to sell up.
FTSE 100 - Risers
Weir Group (WEIR) 1,575.00p +4.79%
Carnival (CCL) 2,067.00p +3.77%
Antofagasta (ANTO) 1,059.00p +2.82%
Vodafone Group (VOD) 169.45p +2.70%
IMI (IMI) 905.00p +2.67%
Polymetal International (POLY) 850.00p +2.66%
Fresnillo (FRES) 1,353.00p +2.58%
Rio Tinto (RIO) 2,895.50p +2.57%
ARM Holdings (ARM) 490.30p +2.57%
Kazakhmys (KAZ) 723.50p +2.33%
FTSE 100 - Fallers
Man Group (EMG) 77.00p -2.28%
Morrison (Wm) Supermarkets (MRW) 265.10p -1.96%
AstraZeneca (AZN) 2,624.00p -1.15%
British Sky Broadcasting Group (BSY) 690.00p -0.79%
Tesco (TSCO) 308.75p -0.77%
Imperial Tobacco Group (IMT) 2,394.00p -0.66%
ITV (ITV) 79.00p -0.63%
Evraz (EVR) 319.50p -0.62%
Land Securities Group (LAND) 717.50p -0.49%
Unilever (ULVR) 2,016.00p -0.49%
FTSE 250 - Risers
Bumi (BUMI) 439.00p +14.62%
Intermediate Capital Group (ICP) 260.10p +14.43%
Kenmare Resources (KMR) 45.45p +6.79%
Regus (RGU) 95.75p +6.45%
Yule Catto & Co (YULC) 200.00p +6.21%
Dixons Retail (DXNS) 14.27p +4.77%
Supergroup (SGP) 331.30p +4.68%
Centamin (DI) (CEY) 67.60p +4.24%
Morgan Crucible Co (MGCR) 282.40p +4.21%
Rathbone Brothers (RAT) 1,198.00p +4.08%
FTSE 250 - Fallers
Homeserve (HSV) 175.20p -22.96%
Lamprell (LAM) 107.00p -8.55%
Gem Diamonds Ltd. (DI) (GEMD) 214.10p -3.56%
Petra Diamonds Ltd.(DI) (PDL) 127.20p -3.20%
JD Sports Fashion (JD.) 727.00p -3.07%
Savills (SVS) 303.00p -2.95%
Mitchells & Butlers (MAB) 228.00p -2.69%
Genus (GNS) 1,203.00p -2.67%
Aquarius Platinum Ltd. (AQP) 83.20p -2.06%
De La Rue (DLAR) 984.00p -1.99%