Date: Tuesday 19 Jun 2012
- G20 to take 'all necessary policy measures'
- UK, US stimulus hopes boost markets
- Whitbread, Home Retail rise strongly
UK stocks were trading near their highest levels of the day by lunchtime on hopes that the world's leaders can pull together to battle the global financial crisis.
According to a leaked draft communique, Eurozone leaders of the Group of 20 said that they "will take all necessary policy measures to safeguard the integrity and stability of the area, improve financial markets and break the feedback loop between sovereigns and banks."
IMF Managing Director Christine Lagarde revealed yesterday that its resources were getting an additional boost of $26bn to take its anti-crisis firewall to a total of $456bn. “Countries large and small have rallied to our call for action, and more may join. I salute them and their commitment to multilateralism,” Lagarde said in a statement.
UK inflation fell unexpectedly in May to back within the government's target level, raising expectations that the Bank of England would soon ramp up its quantitative easing programme. The Consumer Prices Index (CPI) fell to 2.8% in May, from 3% in April, according to figures from the Office for National Statistics. Analysts had expected it to remain steady but lower fuel prices, as well as food and drink, helped push it down.
Meanwhile, the Federal Open Market Committee comes together today for a two-day meeting; markets are hoping that members will vote on further easing measures in light of recent economic data and Eurozone concerns.
Greek leaders that will form part of the new coalition government are to put together a team to renegotiate the conditions of the EU bailout programme. The announcement came shortly after the Greek press confirmed that the meeting between New Democracy's Antonis Samaras and Democratic Left leader Fotis Kouvelis has ended. Kouvelis has said that his party will also support the coalition government.
In other news, Germany's economic sentiment indicator fell to -16.9 points in June from the previous month's 10.8, according to the Centre for European Economic Research (ZEW). It is the second consecutive decline for this leading indicator and the largest one-month drop since October 1998.
Forecast-beating like-for-like (LFL) sales growth in its first quarter saw shares of Whitbread jump this morning. The Premier Inn and Costa Coffee owner reported that LFL sales increased by 4.5%, better than expectations of a 3% improvement.
Engineering group Weir was also making impressive gains after reiterating its full-year forecast at its capital markets presentation today. Jefferies has said that this implies the reconfirmation of the pre-tax profit guidance of £470m "which would in theory be equivalent to a 4% upgrade versus Bloomberg consensus forecasts".
Property firm Hammerson rose after announcing that it is set to off-load most of its London office space as it pushes forward with plans to focus solely on retail space. The company has exchanged contracts on the majority of its office portfolio with Brookfield Office Properties for £518m.
Consumer products and food groups were firmly out of favour today after France's Danone slashed its 2012 guidance on the back of the tough trading environment in Europe in the second quarter. Household cleaning and cosmetic firms Unilever and Reckitt Benckiser were unwanted, along with sweeteners giant Tate & Lyle and bread manufacturer AB Foods.
Shares in Home Retail Group leapt after Argos sales held up in the first quarter, delighting investors who expected them to be hit by bad weather. The stock jumped nearly 24% after Argos revenues came in at £819m for the quarter, down 0.2% on a like-for-like basis. The City consensus was for a 4% fall in like-for-like sales in the three months to the start of June after the wettest April in 100 years.
Fellow retailer Dixons was on the up after Bank of America upgraded the stock to 'neutral'.
Engineering and construction group Kentz rose strongly after it said it was on track to hit its revised targets as its backlog of work continued to grow.At the end of May 2012 that backlog had grown to $2.5bn, up from $2.46bn in April.
Military counter-measures specialist Chemring was a heavy faller after saying that global defence markets continue to be uncertain, with budget cuts in all NATO countries. Nevertheless, it remains confident of a strong second half and meeting full-year expectations.
FTSE 100 - Risers
Whitbread (WTB) 1,963.00p +6.17%
Weir Group (WEIR) 1,501.00p +4.45%
ARM Holdings (ARM) 508.00p +3.55%
Antofagasta (ANTO) 1,105.00p +2.98%
InterContinental Hotels Group (IHG) 1,534.00p +2.81%
Evraz (EVR) 282.10p +2.58%
Vedanta Resources (VED) 963.00p +2.45%
Eurasian Natural Resources Corp. (ENRC) 424.20p +2.44%
Hammerson (HMSO) 427.10p +2.25%
BG Group (BG.) 1,257.50p +2.15%
FTSE 100 - Fallers
Unilever (ULVR) 2,039.00p -2.30%
Reckitt Benckiser Group (RB.) 3,325.00p -1.89%
Experian (EXPN) 919.50p -1.50%
Diageo (DGE) 1,579.50p -1.40%
Tate & Lyle (TATE) 639.00p -1.16%
Fresnillo (FRES) 1,544.00p -0.90%
Serco Group (SRP) 544.00p -0.73%
Intertek Group (ITRK) 2,579.00p -0.62%
Associated British Foods (ABF) 1,222.00p -0.57%
Imperial Tobacco Group (IMT) 2,392.00p -0.33%
FTSE 250 - Risers
Home Retail Group (HOME) 91.85p +23.54%
Dixons Retail (DXNS) 14.90p +9.56%
Kentz Corporation Ltd. (KENZ) 353.70p +8.83%
Brown (N.) Group (BWNG) 256.00p +4.49%
TalkTalk Telecom Group (TALK) 175.70p +4.46%
SEGRO (SGRO) 220.80p +3.32%
Stobart Group Ltd. (STOB) 121.40p +3.32%
Genus (GNS) 1,166.00p +3.09%
Raven Russia Ltd (RUS) 57.90p +2.93%
Phoenix Group Holdings (DI) (PHNX) 469.00p +2.90%
FTSE 250 - Fallers
Chemring Group (CHG) 294.10p -9.06%
Imagination Technologies Group (IMG) 450.40p -7.29%
Bumi (BUMI) 345.50p -3.71%
JD Sports Fashion (JD.) 609.50p -2.71%
NMC Health (NMC) 197.50p -2.47%
Domino Printing Sciences (DNO) 552.00p -2.30%
Galliford Try (GFRD) 575.00p -2.29%
Ruspetro (RPO) 127.30p -2.08%
Melrose (MRO) 364.20p -1.73%
AZ Electronic Materials SA (DI) (AZEM) 292.40p -1.32%
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