Market overview: Footsie rises on speculation of Chinese rate cut
Tuesday 18 Jun 2013

1630:Close UK stocks have finished the day slightly higher, led by shares of Whitbread. The owner of the Costa brand of coffee shops unveiled a 13.8 per cent rise in first quarter sales. On the economic front, UK consumer prices rose at a 2.7 per cent year-on-year pace in May, a tenth of a percentage point more than expected. Worth pointing out, that was the 42nd consecutive month above the Bank’s 2 per cent target, which led economists at Barclays to say that this news is likely to add to concerns within the Monetary Policy Committee (MPC) about the anchoring of inflation expectations. Hence, “today’s news reinforces the view that an expansion of quantitative easing under new governor Mark Carney is far from being a foregone conclusion,” the broker added. Acting as a backdrop, the China Securities Journal cited a senior researcher at the Chinese Academy of Social Sciences as saying that China could cut interest rates if the slowdown worsens. In any case, traders were keeping their cards close to their chests ahead of what seemed to be shaping up to be a make-or-break policy announcement from the US Federal Reserve tomorrow. FTSE 100 up 44 to 6,374.

1440: The FTSE 100 continues to extend gains after a decent start on Wall Street with US benchmarks up 0.2-0.3 per cent after the opening bell. The FTSE 100 is up 56 points at 6,387. Whitbread (up 3.8 per cent at 3,035p) is leading the risers now in London after a well-received first-quarter statement which said that sales were up 13.8%, boosted by another strong performance from Costa. Ronnie Chopra, Head of Strategy at Tradenext, said today that the figures show that Whitbread ‘continues to go from strength to strength’ and bullish overseas expansion plans should help deliver strong organic growth this year. Tradenext kept its ‘buy’ rating and 3,300p target price for the stock.

1330: US housing starts came in at an annualised rate of 914,000 in May, well ahead of the previous month's reading of 856,000. The consensus estimate had been for 950,000. Building permits were roughly in-line with forecasts, although the previous months numbers were revised downwards. May's consumer price index rose by 1.4 per cent year-on-year, as forecast. FTSE 100 up 51 to 6,381.