Date: Thursday 27 Sep 2012
Having briefly broken above 5800 shortly after the start of trading, on the back of news of stimulus measures in China, the top share index move into negative territory in the afternoon session, before rallying near the close.
It was revealed today that the UK's GDP decreased by 0.4% between the first and second quarters of 2012, revised from a previously estimated decline of 0.5%. The main reason for the revision is that construction output grew by 3.0%, revised up from the previously estimated fall of 3.9%. Significantly, real household disposable income rose by 1.9% quarter-on-quarter, the biggest jump for three years.
This has led The Economist to write that: "The economic storms that have deluged Britain since 2008 have not cleared entirely. There is no reason for policymakers to relax, let alone celebrate. But the weather at last appears to be improving somewhat."
The news was less good for the UK's balance-of-payments, with the current account deficit widening to an unprecedented £20.8bn or 5.4% of GDP -the worst reading since 1988- in the second quarter, led by drops in investment income and net exports.
On the subject of Spain's austerity budget, a quarter of an hour before the close, and several hours later than expected, Mariano Rajoy’s government finally announced 43 measures which have been designed to stimulate the economy and cut the deficit by 13bn euros.
Miners were back in fashion today, after China's central bank pumped record amounts of liquidity into the banking system this week. Rio Tinto, Xstrata and Anglo American were among the big gainers.
Anglo American Platinum (Amplats) is to initiate disciplinary action the 80% of its workforce at its Rustenburg mines that continues to strike illegally. The firm has made repeated calls for the strikers to return to work since it re-opened the mines on Tuesday 17th September, having previously halted operations amid a wave of labour unrest.
One mining stock not on the rise was controversy-magnet Bumi. The shares were hit by reports of a rift between two of its major shareholders: the Bakrie family and Smin Tan.
Since Tan pumped a billion dollars into the company the shares have fallen around 80%. The battle between the two factions could risk the $3.0bn deal that was signed in 2010 with the aim of making Bumi one of the world's largest coal exporters.
Shares in Bumi have been hit this week after Bumi said it was investigating allegations of financial and other irregularities at its Indonesian operations.
Atlantic Coal, the open cast coal production and processing company, was also clobbered. The AIM-listed tiddler saw a widening of half year losses after exceptional expenses and rising administrative expenses offset a 79 per cent leap in gross profit.
Sweeteners group Tate & Lyle said first half adjusted operating profit will be similar to last year's level, in line with expectations. The company saw an improved performance in the second quarter in its Speciality Food Ingredients business. "Overall, while recognising the current level of uncertainty around the wider economy and volatile corn markets, we continue to expect to make progress this financial year," the group said.
Sticking with the food theme, contract caterer Compass's expectations for the full year remain unchanged after a strong performance in the fourth quarter as its US and emerging markets continue to underpin growth. After rising initially on the release of the figures, the stock turned south as brokers weighed in with their views.
"We remain positive on Compass and stick with a 770p target price. However, further share progress may depend on more returns of capital, which could now be delayed. We move from Buy to ADD (Buy since 31 March 2009)," said Seymour Pierce,
Compass announced a restructuring of its Southern Europe operations which should yield £95m of cost savings a year a couple of years down the line. The restructuring will lead to exceptional cash charge of £150m over two years and a non-cash exceptional charge of £195m, however, which could persuade the company not to renew its share repurchase programme when the current bout of buy-backs finish.
Numis Securities downgraded the stock to "hold", while leaving its target price at 750p.
Package tour operator TUI Travel is flying high after it said it remains on track to meet its full year expectations, following strong trading in the summer high season, with improved margins and load factors versus the prior year.
The reshaping of Aviva under Executive Chairman John McFarlane continues apace, with the insurance titan announcing the sale of its controlling interest in its Sri Lankan joint venture, Aviva NDB Holdings Lanka.
Pharmaceuticals colossus Shire is in rude helath after Jefferies Hoare Govett upgraded the stock from "hold" to "buy", and moved the target price up to 2400p from 2100p.
"We anticipate upcoming news to potentially boost expectations for Shire's longer-term organic growth prospects," the broker said, while it sees fewer risks to the firm's lucrative attention deficity hyperactivity disorder (ADHD) franchise from competitors peddling generic versions of Shire's drugs.
Internet video security firm IndigoVision is awash with cash after a strong start to the new financial year and so has announced a special dividend of 70p per share.
Metals prices rose on the futures markets. Gold for December delivery wiped out yesterday's losses to rise $13.10 to $1,766.70 an ounce, while the December copper futures contract surrendered the morning's gains wand was down 50 cents to $370.95 a pound at the London close.
Brent crude for November delivery finished 152 cents dearer at $111.56 a barrel in early London trading.
Investors turned their backs on gilts to ride the equities rally. The yield on the benchmark 10-year gilt rose to 1.72% from 1.69% overnight. Yields move inversely to prices.
FTSE 100 - Risers
Melrose (MRO) 245.70p +2.72%
Evraz (EVR) 244.50p +2.64%
BAE Systems (BA.) 327.30p +2.38%
Tate & Lyle (TATE) 670.00p +2.37%
Randgold Resources Ltd. (RRS) 7,475.00p +1.91%
Barclays (BARC) 217.25p +1.69%
Wood Group (John) (WG.) 801.00p +1.65%
Amec (AMEC) 1,156.00p +1.58%
Rio Tinto (RIO) 2,884.00p +1.51%
GKN (GKN) 217.20p +1.40%
FTSE 100 - Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 151.50p -1.56%
Pennon Group (PNN) 718.50p -1.37%
Tesco (TSCO) 335.55p -1.29%
Capital Shopping Centres Group (CSCG) 328.90p -1.02%
Carnival (CCL) 2,276.00p -1.00%
Compass Group (CPG) 704.50p -0.98%
RSA Insurance Group (RSA) 112.00p -0.97%
Morrison (Wm) Supermarkets (MRW) 287.50p -0.83%
InterContinental Hotels Group (IHG) 1,617.00p -0.80%
Rexam (REX) 436.90p -0.77%
FTSE 250 - Risers
NMC Health (NMC) 188.00p +4.39%
Talvivaara Mining Company (TALV) 153.90p +4.20%
Dairy Crest Group (DCG) 346.10p +3.97%
Imagination Technologies Group (IMG) 487.90p +3.81%
QinetiQ Group (QQ.) 187.20p +3.37%
JPMorgan Indian Inv Trust (JII) 366.00p +3.30%
F&C Asset Management (FCAM) 97.75p +2.89%
Shanks Group (SKS) 81.00p +2.53%
Unite Group (UTG) 256.70p +2.43%
Filtrona PLC (FLTR) 512.50p +2.40%
FTSE 250 - Fallers
Bumi (BUMI) 147.10p -5.71%
Supergroup (SGP) 604.50p -4.05%
JD Sports Fashion (JD.) 701.00p -3.97%
Euromoney Institutional Investor (ERM) 766.00p -3.34%
Ladbrokes (LAD) 174.00p -3.01%
Rank Group (RNK) 147.00p -2.46%
Spectris (SXS) 1,692.00p -2.14%
Pace (PIC) 159.00p -2.09%
Hays (HAS) 78.80p -1.87%
Domino's Pizza Group (DOM) 531.00p -1.76%
FTSE TechMARK - Risers
Sepura (SEPU) 83.50p +7.74%
DRS Data & Research Services (DRS) 18.00p +4.35%
Phoenix IT Group (PNX) 154.50p +4.04%
Optos (OPTS) 196.75p +2.34%
Vectura Group (VEC) 84.50p +1.50%
Ricardo (RCDO) 386.75p +1.38%
XP Power Ltd. (DI) (XPP) 1,000.00p +1.32%
Innovation Group (TIG) 21.25p +1.19%
FTSE TechMARK - Fallers
Hiwave Technologies (HIW) 1.65p -7.04%
Promethean World (PRW) 23.00p -4.17%
Oxford Biomedica (OXB) 2.60p -3.35%
Ark Therapeutics Group (AKT) 3.35p -2.90%
Gresham Computing (GHT) 69.75p -1.76%
Emblaze Ltd. (BLZ) 47.50p -1.55%
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