Date: Thursday 07 Mar 2013
The FTSE 100 finished with moderate gains on Thursday as investors digested policy-rate decisions in both the UK and Europe.
Matt Basi, the Head of UK Sales Trading at CMC Markets, said European stock markets experienced "jittery trade" with traders pausing for thought after the significant gains of recent sessions.
"Hopes of a pull-back amongst bearish traders proved unfounded however, as indices found support above yesterday’s closing levels," he said.
The Bank of Japan (BoJ), Bank of England (BoE) and European Central Bank (ECB) all refrained from injecting more stimulus into their economies today.
The BoJ voted to keep interest rates and its asset purchase programme unchanged, a decision that was widely expected given the Bank's recent aggressive easing. This was Governor Masaaki Shirakawa's last meeting before a new leader is set to succeed him and take bolder action to end Japan's ongoing deflation.
At noon, the BoE revealed that policy-makers had voted to maintain interest rates at their record-low level of 0.5% (where they have been since March 2009) and keep its asset purchase programme unchanged at £375bn. However, it remains to be seen how tight the vote actually was as the proposal to increase asset purchases continues to gather support.
Meanwhile, the ECB also decided to stand pat, leaving its main refi rate at 0.75% as expected. In the following press conference however, ECB President Mario Draghi did acknowledge that the policy-makers had discussed a rate cut.
According to analyst Victoria Clark from Investec: "the ECB President’s manner in today’s press conference, with his responses a little prickly and evasive, is suggestive of the meeting having been a difficult one for Mr Draghi to manage. Hence, the possibility of a future refi rate cut now looks to be back on the agenda."
Supporting stock markets this afternoon was the news that initial jobless claims Stateside came in better than expected: claims fell from an upwardly revised 347,000 to 340,000 last week, the third lowest figure of the last five years and well below the 355,000 consensus forecast.
Insurance giant Aviva was forced to slash to dividend after swinging into the red in 2012, after taking a £3.3bn write-down on a disposal in the US. Aviva also said that its overall situation does not warrant bonuses for executive directors for 2012 or pay rises for 2013. Shares dropped sharply from the off.
Panmure Gordon cut its rating for Aviva from 'buy' to 'hold' today, saying that while the dividend cut will remove some uncertainty, "the market will rightly be disappointed".
Heading the other way was temporary power and temperature control provider Aggreko which rocketed after posting a strong performance in 2012 with trading profit up 13% last year. Investec upgraded the stock from 'hold' to 'buy' this morning.
UBS has downgraded its rating for industrial manufacturing conglomerate Melrose from 'buy' to 'neutral' one day after the company's full-year results, highlighting issues with the core divisions. UBS explained that if its Elster business is excluded, Melrose’s core orders were down 11% from the first half to the second.
British asset management firm Schroders was higher after saying that assets under management reached record levels in spite of choppy markets and falling profits.
IMI, the engineering firm, rose strongly after boasting a "resilient" set of results in 2012 and unveiling a share buy-back programme of up to £175m over the next 12 months.
Precious metals group Polymetal dropped after Nomura downgraded its recommendation for the firm after cutting its gold-price forecasts for 2013 and 2014.
Spirax-Sarco Engineering climbed after it recommended a windfall dividend of 100p per share, worth a total of £78m, after posting record sales and profit in 2012.
Investment trust RIT Capital Partners rose after it reported its highest net asset value per share of 1,309p on February 22nd, a financial update has shown.
Meanwhile, National Express dropped into the bottom spot after Elliott Advisors, one of its largest shareholders, last night unveiled plans to trade in around 50.59m shares, equal to a 9.9% stake, in a secondary placing.
Balfour Beatty, the international infrastructure group, disappointed with its 2012 results, posting a 70% decline in reported pre-tax profit from continuing operations.
FTSE 100 - Risers
Aggreko (AGK) 1,939.00p +10.30%
IMI (IMI) 1,319.00p +4.52%
Meggitt (MGGT) 490.10p +2.94%
Schroders (SDR) 2,086.00p +2.46%
Barclays (BARC) 309.50p +2.43%
Rio Tinto (RIO) 3,450.00p +2.40%
Sage Group (SGE) 352.10p +2.32%
Reckitt Benckiser Group (RB.) 4,616.00p +2.21%
CRH (CRH) 1,480.00p +2.07%
Admiral Group (ADM) 1,356.00p +1.65%
FTSE 100 - Fallers
Aviva (AV.) 314.80p -12.51%
British Sky Broadcasting Group (BSY) 866.50p -2.48%
Polymetal International (POLY) 951.50p -2.46%
Lloyds Banking Group (LLOY) 49.86p -2.27%
Melrose Industries (MRO) 261.10p -2.25%
United Utilities Group (UU.) 726.00p -2.16%
Royal Bank of Scotland Group (RBS) 303.20p -1.91%
ARM Holdings (ARM) 946.00p -1.77%
Morrison (Wm) Supermarkets (MRW) 259.00p -1.60%
Kazakhmys (KAZ) 547.00p -1.44%
FTSE 250 - Risers
RIT Capital Partners (RCP) 1,246.00p +6.31%
Elementis (ELM) 260.10p +5.30%
Regus (RGU) 150.80p +5.09%
Spirax-Sarco Engineering (SPX) 2,630.00p +5.07%
Betfair Group (BET) 719.50p +4.58%
SIG (SHI) 145.50p +3.63%
Anite (AIE) 158.50p +3.59%
Workspace Group (WKP) 363.20p +3.48%
SEGRO (SGRO) 267.10p +3.41%
Provident Financial (PFG) 1,580.00p +3.20%
FTSE 250 - Fallers
National Express Group (NEX) 204.50p -11.09%
Petropavlovsk (POG) 253.20p -7.76%
Balfour Beatty (BBY) 274.00p -4.53%
United Drug (UDG) 265.60p -4.46%
Smith (DS) (SMDS) 231.40p -3.78%
Heritage Oil (HOIL) 190.00p -3.46%
Dialight (DIA) 1,300.00p -3.35%
Ladbrokes (LAD) 226.70p -3.24%
African Barrick Gold (ABG) 238.00p -3.13%
New World Resources A Shares (NWR) 241.00p -3.10%
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