News Column

Coutts-London close: FTSE above 6,800, lifted by Fed, Rolls-Royce, housing stocks

June 20, 2014

ENP Newswire - 20 June 2014

Release date- 19062014 - London close: FTSE above 6,800, lifted by Fed, Rolls-Royce, housing stocks.

FTSE closes up 29.55 points at 6,808.11 - Fed in focus - Shire, housing stocks lead techMARK 2,814.08 +0.33% FTSE 100 6,808.11 +0.44% FTSE 250 15,683.88 +0.38% Despite a drop in the final minutes of trade, the top tier index ended today's session above the 6,800 level, having been fairly steady following a strong rise at the opening bell. The FTSE 100 closed 29.55 points higher at 6,808.11, lifted by last night's Fed announcement, a strong performance from Rolls Royce, and gains amongst housing stocks.

It was announced yesterday evening that the Federal Reserve had decided to keep interest rates low at 0.25%, but cut a further $10bn off monthly asset purchases to $35bn. 'For the FTSE, Iraq worries have been banished for the time being, as the Federal Reserve seems distinctly relaxed about the path inflation is taking,' Chris Beauchamp, Market Analyst at IG, said.

'This isn't a signal to go all out on equities, but it means that one reason for caution has been taken away, and traders can rest easy in the continuing assumption that US interest rates are going nowhere until the middle of 2015.

The Fed's dovish stance has allowed many of the recent underperformers to bounce back, with Ashtead's shareholders returning and pushing the shares up 3.5%.

'Even so, the index still has to break 6,880 to avoid the impression that we are still struggling to find a catalyst for a sustained move higher for the FTSE 100.' UK retail sales drop in May, but get World Cup boost UK retail sales dropped in May against April, although the dip was less than analysts expected as World Cup football kit sales boosted the figures. Sales fell 0.5% in May compared with April, although the decline was less than the 0.6% retreat forecast by analysts, according to the Office for National Statistics. Sales rose 3.9% in the year to May, lower than the 4.3% growth expected by a poll of analysts. In other UK macro news, it was revealed mortgage lending stayed flat in May against April as a clampdown on borrowing to prevent a housing bubble kicked in. Gross mortgage lending held steady in May at an estimated GBP16.5bn, according to the Council of Mortgage Lenders (CML), identical to April's gross lending total, but 12% higher than the GBP14.8bn in May last year. In today's US news, initial jobless claims came in at 312,000 in the week to June 14th after a revised 318,000 the previous week.

Analysts had predicted 314,000. 'Overall, this report is consistent with the steady improvement in the separations side of the labour market in the second quarter after a volatile first quarter in which continuing claims moved higher in January before resuming their downward trend in February,' Barclays Research said. Rolls-Royce soars on GBP1bn buyback proposal Jet engine maker Rolls-Royce took off after pledging to buy back GBP1bn of shares if it succeeds in selling its energy gas turbine and compressor business to Germany'sSiemens.

The company also outlined plans to reduce capital spending in the next five years. Construction equipment rental group Ashtead was once again on the up; earlier in the week its results failed to inspire the market, although yesterday saw several brokers, including Oriel and JPMorgan Cazenove issue bullish notes foretelling of long-term growth. Housing stocks were also rebounding after share prices sank last week on concerns about a sooner-than-expected rise in interest rates in the UK.

Barratt Developments, CRH and Travis Perkins were all very much in positive territory after Bank of England policymaker Martin Weale said he didn't see the need for an immediate rate hike. Meanwhile, Vodafone shares were hit by reports its entire Australian network went down for several hours.

Calls, SMS and data services were all affected, according to ITN.

Shire fell after making strong gains in the past few sessions, buoyed by widespread speculation that it will soon be the target of a takeover bid.

Standard Chartered was knocked lower by Nomura, which cut its target price from 1,610p to 1,580p.

FTSE 100 - Risers Rolls-Royce Holdings (RR.) 1,092.00p +8.12% Ashtead Group (AHT) 863.50p +4.04% Barratt Developments (BDEV) 358.90p +3.91% CRH (CRH) 1,657.00p +2.86% Travis Perkins (TPK) 1,622.00p +2.59% Randgold Resources Ltd.

(RRS) 4,734.00p +2.47% Mondi (MNDI) 1,095.00p +2.34% Weir Group (WEIR) 2,688.00p +2.32% BT Group (BT.A) 392.50p +1.95% William Hill (WMH) 342.60p +1.93% FTSE 100 - Fallers Vodafone Group (VOD) 194.85p -1.64% Shire Plc (SHP) 3,738.00p -1.24% Standard Chartered (STAN) 1,269.50p -1.05% Prudential (PRU) 1,345.50p -0.74% Hargreaves Lansdown (HL.) 1,259.00p -0.63% BG Group (BG.) 1,260.00p -0.55% GKN (GKN) 367.60p -0.51% easyJet (EZJ) 1,425.00p -0.42% Tesco (TSCO) 290.90p -0.41% St James's Place (STJ) 755.50p -0.40% FTSE 250 - Risers Supergroup (SGP) 929.50p +6.84% Daejan Holdings (DJAN) 4,986.00p +6.09% Man Group (EMG) 105.10p +6.00% Renishaw (RSW) 1,725.00p +5.57% Northgate (NTG) 519.00p +5.12% Polymetal International (POLY) 559.50p +4.19% Bovis Homes Group (BVS) 762.00p +4.03% Go-Ahead Group (GOG) 2,263.00p +3.95% Infinis Energy (INFI) 237.50p +3.94% Bellway (BWY) 1,474.00p +3.66% FTSE 250 - Fallers Rank Group (RNK) 159.00p -5.36% Ferrexpo (FXPO) 123.60p -5.29% Barr (A.G.) (BAG) 598.50p -5.15% African Barrick Gold (ABG) 204.60p -4.44% Euromoney Institutional Investor (ERM) 1,100.00p -4.10% Synthomer (SYNT) 236.30p -3.75% Keller Group (KLR) 925.50p -3.69% KCOM Group (KCOM) 91.10p -3.44% Kier Group (KIE) 1,676.00p -3.29% Laird (LRD) 286.10p -3.21% NR

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Source: ENP Newswire