Date: Thursday 05 Jul 2012
- BoE expected to increase QE
- ECB predicted to slash rates
- GKN rockets after Volvo Aero acquisition
The FTSE 100 was flat in early trading on Thursday with markets cautious ahead of policy decisions in both the UK and Europe due after midday.
The Bank of England's (BoE's) Monetary Policy Committee (MPC) is predicted to keep the Bank Rate at 0.5% but ramp up its asset purchase programme by £50bn to £375bn. "Financial markets have become increasingly convinced that another slug of QE is on its way, and the MPC has done nothing to dissuade investors from this view," according to analysts at Barclays Capital.
Meanwhile, the European Central Bank (ECB) is widely expected to cut the refinancing rate from the current level of 1.0%. Gerhard Schwarz, head of Equity Strategy at Baader Bank, said: "The most likely outcome in our view is a 25 basis point cut. A bigger cut would increase pressure on the ECB to move towards 'unconventional' stimulus – something the ECB has been very reluctant to do recently. So with the refi rate standing at 0.75% the ECB could still argue to have some firepower left."
Global engineering firm GKN jumped over 12% after saying it had agreed to buy Volvo's aero engine division and would turn to institutional investors to raise money to help pay for it. Arden Partners upgraded its rating on the stock this morning to 'buy'.
GKN plans to pay AB Volvo around £633m for Volvo Aero, which designs, engineers and manufactures components for aircraft engine turbines. To help fund the deal GKN aims to place £140m of new shares with institutional investors, with the rest of the money coming from new debt facilities.
Shareholders of Xstrata were clearly pleased with the group's decision to adjourn its extraordinary general meeting until a later date, with the stock rising early on. Shareholders were due to vote on the the Xstrata-Glencore merger on July 4th.
Utilitiy giant Centrica fell after Goldman Sachs downgraded the stock to 'neutral' and cut its target price from 441p to 422p.
Banks were out of favour early on with Royal Bank of Scotland, Lloyds and Standard Chartered among the worst performers. Barclays edged higher this morning following the sharp falls seen over the past week. Over the last seven days, the stock has dropped over 14% on the back of the LIBOR scandal.
Homewares retailer Dunelm advanced after saying that total revenue increased 21.2% in the fourth quarter of the group's fiscal year, boosted by the unusually wet weather. However, the group cautioned that it expects consumer spending to remain under pressure.
Ahead of its annual general meeting today, Great Portland Estates has revealed its net asset value per share and portfolio valuation are on the up, causing shares to rise.
FTSE 100 - Risers
GKN (GKN) 209.30p +12.17%
Tate & Lyle (TATE) 666.00p +1.52%
Rolls-Royce Holdings (RR.) 891.50p +1.13%
Reed Elsevier (REL) 525.00p +0.86%
Xstrata (XTA) 826.60p +0.71%
Wolseley (WOS) 2,447.00p +0.62%
BAE Systems (BA.) 294.10p +0.58%
Burberry Group (BRBY) 1,340.00p +0.53%
Sainsbury (J) (SBRY) 307.90p +0.49%
Associated British Foods (ABF) 1,294.00p +0.47%
FTSE 100 - Fallers
Evraz (EVR) 256.50p -3.75%
Royal Bank of Scotland Group (RBS) 212.10p -1.12%
ICAP (IAP) 327.60p -1.03%
Centrica (CNA) 314.50p -1.01%
United Utilities Group (UU.) 667.50p -0.89%
Lloyds Banking Group (LLOY) 31.38p -0.88%
Vodafone Group (VOD) 179.00p -0.83%
Severn Trent (SVT) 1,649.00p -0.66%
Vedanta Resources (VED) 936.00p -0.64%
Antofagasta (ANTO) 1,124.00p -0.62%
FTSE 250 - Risers
Dunelm Group (DNLM) 536.00p +4.69%
Domino Printing Sciences (DNO) 564.50p +2.26%
Dixons Retail (DXNS) 18.11p +1.57%
Petra Diamonds Ltd.(DI) (PDL) 125.90p +1.53%
Cape (CIU) 273.70p +1.41%
New World Resources A Shares (NWR) 338.30p +1.32%
Millennium & Copthorne Hotels (MLC) 497.70p +1.16%
Rathbone Brothers (RAT) 1,299.00p +1.09%
Daejan Holdings (DJAN) 2,774.00p +1.06%
Shaftesbury (SHB) 531.50p +1.05%
FTSE 250 - Fallers
Michael Page International (MPI) 365.10p -3.90%
Man Group (EMG) 65.35p -3.26%
Betfair Group (BET) 727.00p -3.20%
Hays (HAS) 74.10p -3.01%
JD Sports Fashion (JD.) 700.50p -2.91%
Aquarius Platinum Ltd. (AQP) 46.82p -2.90%
TalkTalk Telecom Group (TALK) 185.10p -2.58%
Moneysupermarket.com Group (MONY) 126.00p -2.33%
Raven Russia Ltd (RUS) 58.15p -2.10%
Afren (AFR) 107.80p -2.09%
or share it with one of these popular networks:
You are here: news