It
was a mixed finish for European equity markets on Thursday but the FTSE
100 managed to push into positive territory by the close after some
better-than-expected labour-market data in the States.
London’s
benchmark FTSE 100 index ended the day up 14.06 points at 6,565.59, rebounding after hitting a two-week low of 6,551.53 on Wednesday.
“Today has very much been a day of two halves, with fear dominating the
morning session until US optimism dragged the FTSE back out of the
red,” said Alastair McCaig, Market Analyst at
IG. “Traders have
spent much of the week waiting for today’s economic figures and, now
that they’re out, a sense of anti-climax has shrouded the trading
floor,” he said.
US jobless claims dropped from a
revised 310,000 to 305,000 in the week ended September 20th, surprising
the consensus of analysts who had expected a jump to 325,000. IT issues
in a number of regions had distorted figures the week before leading to a
lower number of claims, so benefits were forecast to rise sharply
today.
“While the lingering issues in California could result
in a further uptick in continuing claims in coming weeks, it appears
that the improved initial claims numbers are more a result of improved
labour-market conditions than technical issues,” said analyst Cooper
Howes from
Barclays.
Following a mid-afternoon rally on markets, gains were limited by the close after some US housing figures disappointed
. Pending-home sales
fell for the third straight month, dropping 1.6% in August after a
revised 1.4% decline the month before. Analysts had expected a fall of
just 1%.
Economic data from the States continues to be closely watched in the aftermath of the
Federal Reserve’s
surprise decision last week to hold off from tapering stimulus as it
await a stronger recovery. Conflicting comments from Fed officials since
then have sparked further uncertainty over the future for US monetary
policy with analysts now looking ahead to the October meeting for a
potential ‘taper’.
Uncertainty surrounding
US budget negotiations in Washington has also been weighing on market sentiment
this week. Investors are hoping that politicians can agree on an
extension to the current debt-ceiling limit of $16.7tn ahead of the
deadline on October 1st to avoid a government shutdown when the new
fiscal year begins.
Markets largely gave a subdued reaction to in-line economic data from the UK, as the second and final revision to
UK gross domestic product growth for the second quarter held steady at 0.7%.
US GDP growth meanwhile was unrevised at an annualised rate of 2.5%.
FTSE 100: TUI Travel jumps after lifting guidance
Tour operator
TUI Travel
jumped after hiking its profit guidance for the full year on the back
of a strong summer season and early bookings for the winter.
Compass Group
gained after saying expectations for the full year were unchanged with
organic revenues set to have risen by just over 4% and profit margins to
have grown slightly.
Tullow Oil also rose after
announcing a new oil discovery in Northern Kenya. The group said results
of drilling, wireline logs and samples of reservoir fluid indicate a
potential net oil pay in the Auwerwer and Upper Lokone sandstone
reservoirs of between 60 and 100 metres.
British Gas owner
Centrica and utility group
SSE
were leading the downside, extending losses after this week’s proposal
by Labour leader Ed Miliband to freeze energy bills if the party is
voted back into power in 2015.
Banking and financial stocks were also providing a drag, with
Barclays, Hargreaves Lansdown and Standard Chartered among the worst performers. Insurer
Admiral however was bucking the trend, registering decent gains by the close.
FTSE 250: Soco Intl retreats after yesterday's good news
Soco International
retreated one day after revealing its drill stem tests thus far on the
TGT-10XST1 exploration well on the H5 fault block of the Te Giac Trang
field, had "exceeded all pre-test expectations". It said combined peak
production from two of the three zones tested is over 16,500 barrels of
oil per day.
Ladbrokes slumped after warning that 2013
profits for its digital operations would come in a long way below
current market forecasts. It said it expected 2013 Digital operating
profits to be between £10m and £14m compared with a market consensus of
about £27.5m.
Numis and
Canaccord Geunity downgraded their ratings for the stock this morning.
Tour operator
Thomas Cook
also fell sharply after reporting a decline in bookings in the UK over
summer and flat sales in Europe. In a trading update ahead of the
company’s full-year 2013 results in November, the group said UK bookings
were down 3% on last year with a capacity reduction of 2.5%.
Iron ore producer
Ferrexpo was a high riser after
Macquarie upgraded its rating on the stock to 'neutral' and lifted its target from 155p to 180p.
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