Market overview: FTSE closes up 96 points at 5,916
Fri 14 Sep 2012
LONDON (SHARECAST) - 1630: The London's stock market continued to extend gains on Friday after last night's announcement of more stimulus in the US, pushing the FTSE 100 to a six-month high; the index has not closed above 5,900 since March 26th. The Fed announced that, in order to bolster the economy and make sure that inflation stays close to its target, it would engage in a third round of quantitative easing (QE3) by buying more mortgage-backed securities at a pace of $40bn per month. In economic news, output from the UKs construction sector fell by 10.1% year-on-year in July, in non-seasonally adjusted terms, according to the latest data from the ONS out today. The FTSE 100 closed up 96 point at 5,916.
1424: US industrial production contracted at a 1.2% month-on-month pace in August, with three tenths of a percentage point in that variation having been caused by hurricane Isaac.
1353: Xstrata sends workers home at Kroondal chrome mine.
1334: US retail sales data have come in below forecasts, showing a 0.1% month-on-month rise if automobile and gasoline station sales are stripped out in August (Consensus: 0.4%). The consumer price index for that same month has come in at 0.6% month-on-month, as forecast.
1310: Shares of basic resource companies continue to lead gains at the moment. Meantime, and on the downside, BT is falling on negative news regarding the launch of its YouView internet TV service. On the other hand, Moody's has just raised its view on the company's debt to positive from stable. HSBC has downgraded its view on shares of Intertek to neutral from outperform. As an aside, protesters are said to have entered the German embassy in Sudan. FTSE 100 up 100 to 5,910.
1218: There are conflicting reports at the moment regarding the state of the negotiations between Lonmin and its workers. Nevertheless, Reuters is reporting that Wildcat strikers at Lonmin's Marikana mine have rejected a pay offer today, dashing any hope of ending five weeks of industrial action that has swept through South Africa's platinum sector and laid bare the power struggle in the ruling ANC. As an aside, BoE' Dale says savers and pensioners would be far worse off if central bank had not cut interest rates and engaged in large scale asset purchases.
1035: A market report has appeared according to which Xstrata could recommend Glencore's buy-out to its shareholders on Monday.
1017: Lonmin is moving higher after South Africa's main unions called for the government to become more involved in trying to find a resolution, fueling hopes of an imminent improvement in labour relations. Acting as a backdrop, NYMEX crude futures are now moving higher, above 100 dollars for the first time since May.
0921: Having broken through the 5900 barrier, the top-share index seems reluctant to press on. Russian steel firm Evraz is the best performing blue-chip but the next nine entries at the top of the Footsie leader board are all mining companies, reflecting warm approval of the stimulus measures announced by the US Federal Reserve last night. It looks like investors are abandoning defensive stocks in order to increase the portfolio weightings of resource stocks: tobacco plays BATs and IMPs are burning less brightly while drugs giants Glaxo and Astra are under the weather. Sweetener firms AB Foods and Tate & Lyle are also on the slide, as are Anglo-Dutch household goods titans Reckitt Benckiser and Unilever. FTSE 200 is up 81 at 5,901.
0807: The launch of the third phase of quantitative easing by the US Federal Reserve was meant to have been largely discounted by the market, which makes this morning's rapid advance by stocks a bit of a mystery. The Fed announced that, in order to bolster the economy and make sure that inflation stays close to its target, it would step up what it called policy accommodation by buying more mortgage-backed securities at a pace of 40bn dollars per month. Hopes that the Fed's action will put some juice in the world's largest economy and encourage other central banks to follow suit have seen investors pile into mining stocks. Banks are also wanted, including Royal Bank of Scotland, which this morning announced details of the flotation of its insurance arm, Direct Line Group. FTSE 100 is up 82 at 5,902.