Date: Friday 03 Aug 2012
- RBS leaders risers after first-half figures
- Markets await US data
- Peripheral yields fall, ECB rumours do the rounds
The Footsie was up 1.3 per cent by midday on Friday as strong gains in the financial sector provided a lift to the blue-chip index as it attempted to claw its way back from a heavy sell-off the day before.
Stocks sank yesterday after a press conference with European Central Bank (ECB) President Mario Draghi failed to live up to expectations. One week after Draghi excited investors by saying that the Bank would do "whatever it takes to preserve the euro", he explained that while it is ready to intervene in the bond markets (to bring down elevated bond spreads), this is subject to a number of conditions that Eurozone members must adhere to first. "A statement that left many not only disappointed, but also incredibly frustrated," said analyst Craig Erlam from Alpari.
However, driving gains this morning were rumours that the ECB may hold some sort of extraordinary press conference. Meanwhile, Spanish 10-year bond yields were down 17.2 basis points at 6.993% by midday.
The HSBC/Markit Chinese service sector purchasing managers' index (PMI) rose from 52.3 to 53.1 in July. Combined with the manufacturing data, the composite index improved from 50.6 to 51.9. The news increased speculation that China would be slow to step up policy easing to boost economic growth.
In contrast, the Markit UK services PMI fell from 51.3 to 51.0 in July, worse than analysts' expectations of 51.5, held back by poor weather and Olympic-related disruption.
Meanwhile, markets will be looking ahead to non-farm payrolls data from the US today, which are expected to have increased by 100,000 in July, after increasing by 80,000 the month before. The jobless rate is expected to stay at 8.2% though.
Royal Bank of Scotland advanced after some well-received first-half results. RBS's operating profit in the first half of 2012 fell from £1,966m to £1,834m, after a £125m provision for costs arising from the technology incident in June 2012 and a £50m provision for interest rate swap mis-selling. Investec said this morning that it "remains a mystery as to why nationalisation might be considered practical or desirable" as the bank is "more than capable of responding to any uptick in credit-worth demand for finance". Sector peers Barclays and Standard Chartered were also in demand.
Insurance giant Aviva was also making strong gains ahead of its interim results next week, with both Credit Suisse and Investec retaining their 'outperform' and 'buy' ratings for the stock today. Investec said this morning that the shares "have the potential, we believe, to re-rate once the market has seen the first two or three disposals" of the group's non-core business disposal programme, details of which may be revealed alongside the results.
While only a handful of stocks were registering losses, airline group IAG dropped after saying that it would fail to achieve its 'break-even' operating target this year after it registered a steep loss in the six months to June 30th as fuel costs jumped and losses at its Spanish airline increased.
Mining group BHP Billiton gained after saying that its Chief Executive Officer would forgo his 2012 bonus after a $2.84bn write-down on US shale gas assets.
Pharmaceuticals giant GlaxoSmithKline rose after completing its $3.6bn acquisition of Human Genome Sciences (HGS), its long-term biotech partner.
Second-quarter earnings at Inmarsat were down but the satellite operator was encouraged by progress in returning its core Global MSS business to growth, causing shares to jump early on.
Rentokil Initial, the laundry and pest control conglomerate, also rose after saying its troubled courier division will turn a profit by the end of the year, while first-half profits across the whole business have risen dramatically.
FTSE 100 - Risers
Royal Bank of Scotland Group (RBS) 215.00p +5.13%
Aviva (AV.) 298.90p +4.80%
Barclays (BARC) 169.30p +4.31%
Aggreko (AGK) 2,188.00p +4.19%
Kazakhmys (KAZ) 706.50p +4.05%
Vedanta Resources (VED) 937.50p +3.99%
Standard Chartered (STAN) 1,555.50p +3.77%
Antofagasta (ANTO) 1,079.00p +3.65%
ICAP (IAP) 329.00p +3.49%
Prudential (PRU) 771.50p +3.42%
FTSE 100 - Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 152.80p -4.08%
Smith & Nephew (SN.) 669.50p -0.81%
BT Group (BT.A) 212.60p -0.28%
RSA Insurance Group (RSA) 109.60p -0.27%
Vodafone Group (VOD) 187.55p -0.21%
Reckitt Benckiser Group (RB.) 3,533.00p -0.17%
Diageo (DGE) 1,716.50p -0.06%
FTSE 250 - Risers
Inmarsat (ISAT) 530.50p +9.54%
Rentokil Initial (RTO) 76.30p +6.49%
Cape (CIU) 191.60p +5.10%
Ferrexpo (FXPO) 180.00p +4.90%
Bumi (BUMI) 365.60p +4.46%
ITE Group (ITE) 198.00p +4.43%
International Personal Finance (IPF) 296.60p +4.25%
Barratt Developments (BDEV) 139.50p +4.03%
Cable & Wireless Communications (CWC) 30.83p +4.01%
Kenmare Resources (KMR) 37.48p +3.97%
FTSE 250 - Fallers
Spirent Communications (SPT) 142.20p -1.73%
African Barrick Gold (ABG) 375.70p -1.39%
Bank of Georgia Holdings (BGEO) 1,158.00p -1.36%
Brown (N.) Group (BWNG) 263.40p -1.13%
Wood Group (John) (WG.) 765.50p -1.10%
Aquarius Platinum Ltd. (AQP) 34.33p -1.09%
Fidessa Group (FDSA) 1,415.00p -1.05%
Debenhams (DEB) 91.30p -0.87%
FirstGroup (FGP) 234.40p -0.76%
Big Yellow Group (BYG) 312.50p -0.70%
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