LONDON (SHARECAST) - - FTSE 100 extends rally after ECB news
techMARK 2,120.05 +0.15%
FTSE 100 5,787.36 +0.17%
FTSE 250 11,777.31 +0.86%
- Eyes on US data later today
- Glencore adjourns shareholder meeting, amends merger terms
The Footsie was well off its intraday high of 5,807 by Friday lunchtime, but still trading slightly higher following the massive gains made yesterday as the European Central Bank (ECB) unveiled details of its plans to hep the Eurozone.
London's benchmark index soared by 2.11% on Thursday after ECB President Mario Draghi announced that the bank would embark on unlimited bond-buying on the secondary market, buying notes 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. The purchases would also be tied to “strict and effective conditionality".
"ECB chief Mario Draghi finally delivered on his promise with a bond buying plan unlike one we have seen before, soothing immediate concerns about tensions in the debt markets," said market strategist Ishaq Siddiqi from ETX Capital.
10-year bond yields in Spain and Italy have fallen dramatically this morning: the borrowing rate on Spanish notes was down 29.6 basis points at 5.724% while Italy's dropped 15.1 basis points to 5.08%.
Markets will now be focused on economic data from the US out later today ahead of a crucial Federal Reserve meeting next week. In the few weeks prior to the conference, speculation about further quantitative easing (QE) measures lifted optimism on the markets, but with recent economic figures - such as yesterday's strong ADP jobs report and falling jobless claims - coming in better-than-expected, the Fed's concerns about the economy may have eased.
"Hopes of further QE are quickly fading in the US, today’s non-farm payroll figure could be the final nail in the coffin," said analyst Craig Erlam from Alpari. "Already, the chances of Fed stimulus look pretty slim," he said.
Glencore down, Xstrata up after merger terms amended
Glencore's attempt to rescue the merger deal with mining giant Xstrata involves the upping of its offer to 3.05 Glencore shares per Xstrata share but also abandons the idea of this being a 'merger of equals'. Xstrata revealed that as well as increasing exchange ratio from 2.8, the new proposal envisages changes to the proposed governance arrangements, including Glencore CEO Ivan Glasenberg assuming the same role at the combined group, and the ability for Glencore to structure the transaction as a takeover offer or as a scheme of arrangement of Xstrata. Shares in Glencore sank on the news, while Xstrata surged.
Other mining stocks continued to rally on the news from the ECB yesterday, including Evraz which jumped around 12%. Sector peers Kazakhmys, Vedanta, Antofagasta and Rio Tinto also rose strongly.
Banking group Barclays was higher after Deutsche Bank upgraded the stock to 'buy' this morning. Royal Bank of Scotland and Lloyds were also in demand.
Meanwhile, insurers Resolution, Aviva and Legal & General gained after Credit Suisse said of the sector this morning: "we expect the relatively defensive balance sheets and resilient growth of the UK insurers to remain appealing in the near- to mid-term, with the valuation premium to European peers likely to be sustained."
Support services and construction group Interserve was in demand after being named as the preferred bidder to provide a range of services to National Health Service (NHS) trusts in the Midlands. The contract has a potential value of up to £300m and will run for seven years.
Meanwhile, defence contractor Cobham also rose after being awarded a five-year contract to supply on-board inert gas generating system nitrogen inert units for AH-64 Apache helicopters used by the US arm. The "indefinite delivery, indefinite quantity" contract is worth around $15m.
FTSE 100 - Risers
Evraz (EVR) 253.40p +11.78%
Xstrata (XTA) 1,049.00p +7.15%
ICAP (IAP) 343.40p +5.76%
Kazakhmys (KAZ) 633.50p +5.76%
Barclays (BARC) 203.70p +5.52%
Vedanta Resources (VED) 978.50p +5.44%
Antofagasta (ANTO) 1,218.00p +5.27%
Rio Tinto (RIO) 2,978.00p +4.64%
Eurasian Natural Resources Corp. (ENRC) 323.90p +4.18%
Anglo American (AAL) 1,916.00p +4.10%
FTSE 100 - Fallers
Glencore International (GLEN) 374.90p -4.45%
Diageo (DGE) 1,727.50p -2.10%
SABMiller (SAB) 2,784.00p -2.02%
Imperial Tobacco Group (IMT) 2,298.00p -1.96%
GlaxoSmithKline (GSK) 1,409.50p -1.95%
British American Tobacco (BATS) 3,181.00p -1.73%
National Grid (NG.) 687.50p -1.72%
Unilever (ULVR) 2,274.00p -1.60%
Babcock International Group (BAB) 917.50p -1.56%
Bunzl (BNZL) 1,115.00p -1.50%
FTSE 250 - Risers
Ferrexpo (FXPO) 176.30p +13.96%
Hunting (HTG) 845.00p +5.23%
Henderson Group (HGG) 110.00p +4.86%
Jupiter Fund Management (JUP) 246.70p +4.84%
Bank of Georgia Holdings (BGEO) 1,228.00p +4.78%
Man Group (EMG) 80.05p +4.64%
Talvivaara Mining Company (TALV) 137.80p +4.00%
Tullett Prebon (TLPR) 300.80p +3.83%
International Personal Finance (IPF) 315.20p +3.75%
Rank Group (RNK) 133.90p +3.72%
FTSE 250 - Fallers
Ophir Energy (OPHR) 615.00p -2.77%
Moneysupermarket.com Group (MONY) 142.10p -1.86%
De La Rue (DLAR) 1,010.00p -1.85%
New World Resources A Shares (NWR) 288.70p -1.80%
Dixons Retail (DXNS) 19.52p -1.66%
Rathbone Brothers (RAT) 1,349.00p -1.53%
Fidessa Group (FDSA) 1,448.00p -1.36%
Hansteen Holdings (HSTN) 78.00p -1.02%
TalkTalk Telecom Group (TALK) 193.30p -0.97%
Daejan Holdings (DJAN) 2,908.00p -0.92%