LONDON (SHARECAST) - - ECB unveils bond-buying details
techMARK 2,116.90 +1.44%
FTSE 100 5,777.34 +2.11%
FTSE 250 11,676.44 +2.01%
- Stocks surge in afternoon trade, helped by US data
- BoE maintains rates and QE
Global stocks markets rocketed higher on Thursday afternoon after European Central Bank (ECB) President Mario Draghi revealed details of the bank’s bond-buying plan.
London’s Footsie jumped over 2%, the CAC in Paris and DAX in Frankfurt both rose 3%, while Madrid’s IBEX and Milan’s FTSE MIB ended the day between 4% and 5% higher.
“On a day that many traders would have been looking towards in their diaries this week it would appear that the detail that was needed in exactly how the ECB would tackle the crisis was finally made available,” said sales trader Matthew Nelson.
Just one month after promising to do “whatever it takes to preserve the euro”, Draghi announced that the ECB would embark on an unlimited bond purchase programme of notes on the secondary market with maturities between one and three years. They would be ‘sterilised’ so as to avoid the inflationary pressures which excessive growth in the money supply is thought to engender in the long-run.
Speaking after the ECB maintained its key interest rate at 0.75%, Draghi said that the purchases, known as Outright Monetary Transactions, will “enable us address severe distortions in government bond markets which originate from, in particular, unfounded fears on the part of investors of the reversibility of the euro.”
Economic data from the US also helped to lift markets this afternoon: weekly jobless claims were below expectations; the ISM non-manufacturing index surprised to the upside in August; while the ADP employment report beat forecasts.
In other news today, the UK's Monetary Policy Committee did what was largely expected and maintained its Bank Rate at 0.5% and asset purchase programme at £375bn in its policy announcement at noon. The Bank of England injected £50m of additional quantitative easing in July which is not due to be completed until the end of October.
FTSE 100: Miners and banks benefit from increased risk appetite
Evraz, Polymetal, Vedanta, Antofagasta, Randgold and ENRC were among the best performing resource stocks today and Lloyds and Barclays led the banks on hopes over the global economy.
Helping gains today for miners were gold futures which jumped to $1,716.90 the highest level since March. According to Jeffrey Currie, the head of commodities research at Goldman Sachs, prices will rise to $1,840 by the year-end.
Hotel, restaurant and Costa coffee owner Whitbread jumped after reporting second-quarter sales growth of 14.8%, up from 13.9% in the first three months of the year. Investec said that the Whitbread "offers compelling value for a stock with impressive roll-out potential, strong asset backing and impressive trading momentum."
Supermarket group Morrisons also rose after pre-tax profits in the first half came in 3% ahead of consensus estimates. Jefferies said this morning that the stock is trading at an "unjustified" discount to supermarket peers in the UK and Europe.
Just a handful on the Footsie were in the red today with Imperial Tobacco extending losses from yesterday when it was reported that France may be considering a plain packaging law and price hikes for cigarettes packets.
FTSE 250: Lonmin leads miners higher after accord with strikers
South Africa-focused platinum miner Lonmin rose strongly on reports that it has reached a 'peace accord' with its striking miners following a wave of protests over the last few weeks which resulted in the deaths of around 40 people. Mining peers Hochschild Mining, Centamin and Aquarius Platinum were all registering decent gains in afternoon trade.
AG Barr was in demand after Societe Generale upgraded the shares to ‘hold’ and lifted its target price from 370p to 440p, one day after the group announced it is in discussions about an all-share merger with soft drinks peer Britvic. The latter was in the red today after both Societe and Bank of America Merrill Lynch cut their recommendations on the stock.
Electrical retailer Dixons was higher after saying it made an "encouraging" start to the year with decent growth in the UK, Ireland and Northern Europe, though trading in Southern Europe continues to be tough. Seymour Pierce raised its rating on the stock today to ‘buy’, saying that it was “reassured by this trading update that underlying momentum is set to continue within its two core businesses driven by both market consolidation and plenty of innovation”.
easyJet gained after reporting that it carried 6% more passengers in August. Yesterday the firm also announced that it would introduce allocated seating in its planes.
FTSE 100 - Risers
Evraz (EVR) 226.70p +7.19%
Lloyds Banking Group (LLOY) 36.20p +6.69%
Polymetal International (POLY) 1,020.00p +6.58%
Barclays (BARC) 193.05p +6.10%
Vedanta Resources (VED) 928.00p +5.82%
Antofagasta (ANTO) 1,157.00p +5.57%
Aviva (AV.) 344.90p +5.31%
Whitbread (WTB) 2,210.00p +5.29%
Randgold Resources Ltd. (RRS) 6,795.00p +5.27%
Kazakhmys (KAZ) 599.00p +5.09%
FTSE 100 - Fallers
Imperial Tobacco Group (IMT) 2,344.00p -2.58%
Tate & Lyle (TATE) 640.50p -1.69%
Burberry Group (BRBY) 1,312.00p -1.13%
Reed Elsevier (REL) 604.00p -0.17%
FTSE 250 - Risers
Gem Diamonds Ltd. (DI) (GEMD) 170.80p +9.42%
New World Resources A Shares (NWR) 294.00p +8.13%
Lonmin (LMI) 568.00p +7.27%
Barr (A.G.) (BAG) 481.60p +6.97%
Hays (HAS) 73.05p +6.49%
Yule Catto & Co (YULC) 170.00p +5.92%
Centamin (DI) (CEY) 81.85p +5.21%
Aquarius Platinum Ltd. (AQP) 36.29p +5.19%
Rathbone Brothers (RAT) 1,370.00p +5.14%
Man Group (EMG) 76.50p +4.94%
FTSE 250 - Fallers
Ruspetro (RPO) 119.30p -2.93%
Daejan Holdings (DJAN) 2,935.00p -2.62%
Britvic (BVIC) 363.00p -1.87%
Ted Baker (TED) 961.50p -1.28%
Rank Group (RNK) 129.10p -1.07%
PayPoint (PAY) 702.50p -0.71%
Beazley (BEZ) 168.50p -0.47%
F&C Asset Management (FCAM) 88.90p -0.34%
Soco International (SIA) 333.00p -0.30%
UK Commercial Property Trust (UKCM) 68.00p -0.29%