LONDON: London stocks moved higher on Wednesday, buoyed by the weak pound as UK inflation dived to a one-year low, while a respite from tensions helped most other major markets benefit from improved sentiment.
Wall Street moved higher at the open of trading, adding to the previous day’s rally as easing trade and Syria concerns allowed investors to concentrate on earnings and upbeat data. Fresh news on US-North Korea talks also provided support to trading in Asia.
“Stocks in Europe are higher… as the global mood starts to improve,” said CMC Markets analyst David Madden.
“There was a strong finish in New York last night and Asia overnight as traders focus more on corporate and economic data.
“While the Syrian conflict and uncertainty surrounding global trade are on hold, investors could remain bullish.”
London’s benchmark FTSE 100 index of major companies was the standout performer in Europe, as official data showed that annual British inflation slowed unexpectedly to 2.5 percent in March from 2.7 percent in February.
The news, which confounded expectations for no change, sent the pound reeling as it undermined the urgency of raising interest rates — although analysts said a hike was still expected in May.
Pundits said the data nevertheless throws into doubt the course of the Bank of England’s monetary policy this year.
“The FTSE 100 has gone from the back of the pack to the market leader, as a sharp deterioration in UK inflation has driven the pound sharply lower, ramping up FTSE gains,” said IG analyst Joshua Mahony.
“The out-performance of the pound has certainly been one of the main determinants of FTSE 100 underperformance among European bourses.”
The weaker pound pushes up share prices of multi-nationals trading on the FTSE.
The FTSE 100 was up 1.1 percent as Wall Street opened for trading. In Paris the CAC 40 added 0.3 percent, while in Frankfurt the DAX 30 bucked the trend, dipping 0.05 percent.
– Hammerson axes takeover –
In company news, British retail property giant Hammerson on Wednesday scrapped a £3.4-billion ($4.9-billion, 3.9-billion-euro) takeover of rival Intu that would have created a pan-European shopping mall giant, citing a weak UK consumer market.
Investors appeared to welcome Hammerson’s decision, with the group’s share price jumping nearly four percent. Intu meanwhile slumped 3.6 percent.
Hammerson’s U-turn comes amid difficulties for retailers who are losing out to fast-growing online sales.
– Wall Street rally –
Meanwhile the easing of global tensions has allowed Wall Street to turn its attention to corporate earnings.
“US stocks are extending a recent rally in early action that has taken the markets into positive territory for the year, with earnings season starting mostly positive, aided by today’s results from Morgan Stanley, CSX Corp and United Continental,” said analysts at Charles Schwab brokerage.
On Tuesday, all three US main indices posted healthy gains on the back of better-than-expected reports from heavyweights including Netflix, Goldman Sachs and Johnson & Johnson.
Adding to the upbeat sentiment was China’s announcement of a timetable to open up its car market as well as news the country’s central bank had eased depositary requirements for most lenders to boost liquidity for businesses.
Source: Brecorder
