LONDON (SHARECAST) - - Chinese GDP growth accelerates in Q4
techMARK 2,217.03 +0.71%
FTSE 100 6,163.99 +0.52%
FTSE 250 12,917.82 +0.55%
- UK retail sales miss forecasts
- EVRAZ, Carnival and Meggitt on the rise
UK stocks had extended gains by Friday lunchtime, with better-than-expected Chinese growth figures offsetting some weak domestic retail sales.
China’s economic growth seems to have accelerated for the first time in two years towards the end of 2012 thanks in part to the stimulus measures implemented by the government.
Chinese gross domestic product grew 7.9% year-on-year in the last three months of 2012, ahead of the 7.8% expected by the consensus.
"Following last night’s five-year closing high in the S&P, equity bulls found more support in the form of impressive Chinese GDP and Industrial Production numbers that will go some way to allaying analyst fears of slowing growth," Matt Basi, a senior sales trader at CMC Markets UK, said.
"The momentum in equity indices is clearly positive, but with the major European markets perched at their recent highs there has been a drop-off in volume as fear of paying the top starts to come into play," he said.
Nevertheless, markets were shrugging off the news that UK retail sales grew at the second-slowest rate since 1998 last month. Sales volumes were down 0.1% month-on-month, missing the consensus forecasting a 0.2% increase.
Meanwhile, with Morgan Stanley due to report its fourth-quarter figures later, "financial shares could be vulnerable to seesaw type movements today", according to financial trader Shavaz Dhalla from Spreadex. This release follows on from the mixed results from other banking heavyweights seen earlier in the week. Both Goldman Sachs and JPMorgan smashed expectations on Wednesday, while Bank of America and Citigroup disappointed markets yesterday.
The University of Michigan confidence survey for January is also due out later Stateside. The index measure for confidence is expected to rise from 72.9 to 75
FTSE 100: EVRAZ leads markets higher; Carnival on the up
Miners across the board were high this morning as the demand outlook brightened following the publication of Chinese GDP figures. EVRAZ was making gains even though it said that steel production fell 6.0% from the third quarter to the fourth, as a result of scheduled maintenance at its ZSMK steel mill in the Siberia region.
The stock was being given a lift this morning by comments from Credit Suisse about the steel sector. The broker said: "The cycle is now recovering. Confidence appears to be returning as the recovery in the financial equities suggested to us could be the case. Anecdotes we hear suggest that the demand outlook (non-res in the US, general demand in EU) could be better than the market believes."
Rio Tinto was rebounding from suffering losses yesterday after announcing that its Chief Executive Officer had resigned following a non-cash impairment charge of approximately $14bn in its 2012 full-year results. Analyst James Gurry from Credit Suisse said this morning: "After the market digests this news we think the focus should remain on iron ore prices, project delivery and the larger macro picture, all [of] which remain unchanged following yesterday's announcement especially given current head of iron ore (80% of earnings / 65% NPV) takes over as CEO, share price pressure should be seen as buying opportunity."
Aerospace components engineer Meggitt was a high riser this morning after Barclays Capital upgraded its rating for the stock from 'equal weight' to 'overweight' and raised its target price from 450p to 520p. The broker said that the shares' 20% valuation discount to peers "will close as investors in the aerospace cycle look away from the more expensive pure-play names with original equipment or aftermarket exposure, and seek sector laggards like Meggitt".
FTSE 250: Spectris, Kentz provide a lift
Instrumentation and controls firm Spectris surged after saying that LFL sales growth accelerated from 2.0% to 4.0% from the third to the fourth quarter of 2012, "helping deliver a robust full year performance despite a challenging trading environment".
Meanwhile, engineering and construction group Kentz was also up after announcing a backlog of $2.75bn at the end of December, up 7.0% year-on-year.
Oil and gas group Ophir was on the rise after receiving a double upgrade from Nomura, from 'reduce' to 'buy'. The broker said that highly-geared E&A drilling in 2013 could be a "company maker". Analysts added that in a ‘blue-sky’ success scenario, 2013 drilling could be worth 500% of the current share price.
In contrast, fund manager Ashmore was being weighed down by a ratings cut by UBS from 'buy' to 'neutral'. "We downgrade Ashmore […] on valuation grounds and because we believe that competitive pressures will persist," the broker said.
FTSE 100 - Risers
Evraz (EVR) 303.20p +4.05%
Kazakhmys (KAZ) 797.00p +2.71%
Carnival (CCL) 2,578.00p +2.10%
Aberdeen Asset Management (ADN) 392.50p +1.95%
Meggitt (MGGT) 439.30p +1.93%
Rio Tinto (RIO) 3,504.50p +1.89%
Associated British Foods (ABF) 1,632.00p +1.62%
CRH (CRH) 1,258.00p +1.53%
Marks & Spencer Group (MKS) 367.90p +1.41%
Diageo (DGE) 1,847.50p +1.26%
FTSE 100 - Fallers
Wolseley (WOS) 2,938.00p -1.87%
Kingfisher (KGF) 280.20p -1.72%
Sainsbury (J) (SBRY) 324.50p -1.07%
International Consolidated Airlines Group SA (CDI) (IAG) 209.70p -0.99%
Resolution Ltd. (RSL) 264.90p -0.97%
Capital Shopping Centres Group (CSCG) 358.00p -0.97%
Prudential (PRU) 924.00p -0.91%
Standard Chartered (STAN) 1,649.50p -0.87%
Weir Group (WEIR) 1,922.00p -0.83%
Rexam (REX) 462.60p -0.58%
FTSE 250 - Risers
Spectris (SXS) 2,166.00p +7.07%
Essar Energy (ESSR) 132.00p +6.88%
Senior (SNR) 218.00p +6.65%
Paragon Group Of Companies (PAG) 265.20p +4.41%
International Personal Finance (IPF) 408.40p +3.92%
Kentz Corporation Ltd. (KENZ) 403.60p +3.75%
Redrow (RDW) 188.50p +3.63%
CSR (CSR) 362.20p +3.49%
Bumi (BUMI) 341.20p +3.39%
Howden Joinery Group (HWDN) 187.00p +3.31%
FTSE 250 - Fallers
JD Sports Fashion (JD.) 715.50p -3.31%
Kenmare Resources (KMR) 35.00p -2.78%
Ashmore Group (ASHM) 354.70p -2.69%
Home Retail Group (HOME) 134.40p -1.61%
IP Group (IPO) 128.00p -1.54%
Mondi (MNDI) 712.00p -1.32%
Dignity (DTY) 1,051.00p -1.22%
Homeserve (HSV) 244.30p -1.17%
PayPoint (PAY) 864.50p -1.03%
Bovis Homes Group (BVS) 630.00p -1.02%