Date: Wednesday 13 Nov 2013
LONDON (ShareCast) - - FTSE 100 sinks to lowest level since mid-October
- Rate-hike speculation follows BoE Inflation Report
- Sainsbury up after strong first half
techMARK 2,625.69 -0.83%
FTSE 100 6,630.00 -1.44%
FTSE 250 15,179.84 -1.23%
UK stocks declined sharply on Wednesday as investor risk appetite was scaled back after a more-hawkish-than-expected Inflation Report from the Bank of England (BoE).
Following recent data which showed a sharp fall in consumer price inflation and declining unemployment, the BoE said that the 7% threshold for the jobless rate – the point at which it will begin to re-assess current monetary policy – could be breached a year earlier than previously planned. It also raised its economic growth assumptions for 2014 and 2015.
Despite the positive revisions, the FTSE 100 finished 96.79 points lower at 6,630, its worst closing level since October 18th when it finished at 6,622.58.
David Madden, Market Analyst at IG, said it seems “the days of rock-bottom interest rates may be coming to an end sooner than initially anticipated, and the London equity market is off over 1% as a result”.
“The drop in unemployment and increased growth guidance from the BoE implies that the quantitative easing gravy train may be reaching the end of its journey. When [Mark] Carney took over as governor of the BoE in July, he suggested that interest rates would remain unchanged for three years; now a rate change could happen within 18 months,” Madden said.
Howard Archer, Chief UK & European Economist at IHS Global Insight, agreed that the message from the BoE was that it remained in no hurry to hike rates. Nevertheless, Archer said he favours a gradual increase in rates beginning in the “latter months of 2015”. “Meanwhile, any further quantitative easing now looks highly improbable”.
Markets were also reacting to an underwhelming Communist Party meeting in China which lacked certain details on reforms. Comments from European Central Bank member Peter Praet were also in focus after he suggested that negative interest rates or asset purchases were still possibilities to boost inflation.
FTSE 100: Sainsbury rises on strong first half
Supermarket giant Sainsbury rose after boasting of its largest market share for a decade in the first half, helped by fast growth from its own-brand food and an even faster growth of non-food.
Sector peer Tesco however was trading in the red after HSBC downgraded the shares to 'neutral'. Vodafone and CRH, both of which impressed with results on Tuesday, were pulling back as Beaufort Securities cut its ratings for the two stocks to 'hold'.
Shares in London Stock Exchange were falling sharply after it posted a 13% decline in adjusted group operating profit on an organic and constant currency basis. According to Sharecast analysts, the fall may also be linked to the significant declines in many Italian bank stocks following the latest earnings out this morning from Intesa San Paolo.
Oil producer Tullow Oil was also lower despite saying it is confident of exiting 2013 with output at record levels after "strong production across the group" in the third quarter.
Utility stocks put in a relatively good performance today as the category benefitted from its defensive characteristics amidst a sell-off across equity markets. Centrica, Severn Trent, United Utilities and Drax were trading higher with the latter receiving a boost after saying full-year underlying earnings would be “materially ahead” of current market consensus forecasts.
FTSE 100 - Risers
Sainsbury (J) (SBRY) 410.70p +2.98%
Centrica (CNA) 363.90p +0.97%
United Utilities Group (UU.) 692.00p +0.51%
easyJet (EZJ) 1,233.00p +0.49%
Croda International (CRDA) 2,341.00p +0.39%
Severn Trent (SVT) 1,825.00p +0.22%
Antofagasta (ANTO) 813.50p +0.12%
Aggreko (AGK) 1,583.00p +0.06%
Sage Group (SGE) 346.00p +0.06%
Capita (CPI) 970.00p +0.05%
FTSE 100 - Fallers
RSA Insurance Group (RSA) 104.10p -4.84%
British Sky Broadcasting Group (BSY) 805.00p -4.17%
Persimmon (PSN) 1,154.00p -3.83%
ITV (ITV) 181.80p -3.45%
Mondi (MNDI) 1,010.00p -3.35%
International Consolidated Airlines Group SA (CDI) (IAG) 371.70p -3.25%
London Stock Exchange Group (LSE) 1,555.00p -3.12%
WPP (WPP) 1,307.00p -2.97%
Barclays (BARC) 249.50p -2.84%
Vedanta Resources (VED) 1,011.00p -2.79%
FTSE 250 - Risers
Fenner (FENR) 450.00p +10.48%
esure Group (ESUR) 224.00p +5.51%
Bwin.party Digital Entertainment (BPTY) 130.00p +4.42%
ICAP (IAP) 391.80p +4.12%
Wood Group (John) (WG.) 812.00p +3.64%
Xaar (XAR) 945.50p +3.33%
Bank of Georgia Holdings (BGEO) 2,161.00p +2.90%
Drax Group (DRX) 653.00p +2.59%
Oxford Instruments (OXIG) 1,458.00p +2.32%
Dixons Retail (DXNS) 47.80p +1.85%
FTSE 250 - Fallers
Partnership Assurance Group (PA.) 325.00p -21.14%
Kier Group (KIE) 1,688.00p -6.64%
NMC Health (NMC) 346.30p -5.79%
Enterprise Inns (ETI) 139.90p -5.28%
Barratt Developments (BDEV) 312.00p -4.67%
Ferrexpo (FXPO) 178.80p -4.64%
Bovis Homes Group (BVS) 751.00p -4.63%
Synthomer (SYNT) 223.90p -3.91%
Greencore Group (GNC) 186.90p -3.86%
Rightmove (RMV) 2,510.00p -3.57%
BC
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