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FTSE stocks led higher towards 7000 by banks, but miners reel from Fed rate hike

Last updated: 17:49 15 Dec 2016 GMT, First published: 06:57 15 Dec 2016 GMT

Dollar bills
  • FTSE 100 closes just shy of 7,000

  • Banks lead gainers, miners the losers

  • US Fed rate hike dominates the market

  • Pound drops 1.45% against the dollar to $1.2383

 

FTSE 100 stocks closed higher on Thursday, just shy of the 7000 mark, but the theme of the session was all about weaker sterling in the wake of the US interest rate hike overnight.

The winners were banks which helped lift the bourse, and the losers of a rising US dollar were miners.

The FTSE 100 ended up 0.7% at 6999.

The pound fell 1.45% against the dollar to $1.2383 as the US currency benefited from Thursday's Federal Reserve meeting, which pointed to a more hawkish three rate rises next year, rather than two. On the stock market, bank stocks, which stand to benefit from higher rates, rose.

The second-highest gainer was Royal Bank of Scotland Group plc (LON:RBS) up 4.4% to 227p while fourth-placed Barclays plc (LON:BARC) advanced by 3.5% to 229.45p.

Lloyds Banking (LON:LLOY) was inside the top-10 too, up 2.6% to 64.37p.

Overall, the biggest riser on the FTSE 100 was energy giant Centrica (LON:CAN), which maintained its earlier gains sparked by the news that it was raising its profit forecast for the year. It closed 5.6% higher at 231.2p..

The biggest fallers were all mining companies. A Who’s Who line-up where the ticker’s biggest faller was Randgold Resources (LON:RRS) down 7.9% to 5470p, followed by Fresnillo (LON:FRES) down 5.6% to 1114p, followed by  Antofagasta Holdings (LON:ANTO) down 5.2% at 683.5p, Anglo American (LON:AAL) down 4% at 1154.5p, Polymetal International plc (LON:POLY) down 3.5% to 777p, BHP Billiton plc (LON:BLT) down 3.2% to 1312p.

Also in the bottom ten were Glencore (LON:GLEN) down 2.7% to 272.05p and Rio Tinto (LON:RIO) down 2.5% to 3088.5p.

They have been hit by a fall in the price of gold, which fell after the US Federal Reserve indicated more interest rate increases next year.

Rising interest rates are generally bad for gold which looks less attractive when savings rates are on the increase.

The mid-cap FTSE 250 ended up 0.5% at 17,769 and led by sports betting and gaming group GVC Holdings plc (LON:GVC) up 7.8% to 663p after a bullish trading statement.

GVC expects pro-forma net gaming revenue for the year to the end of December and adjusted earnings before interest, taxes, depreciation and amortisation to be at the upper end of forecasts as the company's strong trading performance has continued through the fourth quarter.

The company announced a 49% increase in the proposed special dividend, previously announced at the start of November, to 14.9% per share, amid positive momentum in the business and strong cash generation.

Miners again led the decliners among mid-caps.

The FTSE AIM 100 Index closed down 0.2% at 3956 and the FTSE AIM All-Share Index down 0.2% to 823.

A third of London stocks gained while losers were close behind on 30%.


 

1515 GMT - FTSE 100 advances as US stocks bounce; pound drops 

  • FTSE 100 index up 21 points at 6,970

  • Agree takeover moves for Sky and Punch Taverns

  • Precious metal miners weak as gold price falls with strong dollar on Fed rate hike

  • Centrica lifted by upbeat trading statement

3.15pm...US stocks boost

The FTSE 100 pushed higher in late afternoon trading as US stocks made a positive start with investors again digesting yesterday’s move by the Federal Reserve to hike US interest rates for the first time in a year.

New York shares dropped back sharply on Wednesday as the US central bank also pointed to a faster pace of rate rises in 2017 given inflationary concerns over President-elect Donald Trump’s big infrastructure spending plans.

Craig Erlam, Senior Market Analyst at Oanda, said: “The Fed’s decision to raise interest rates for only the second time in a decade on Wednesday came as a shock to no one, with markets having almost entirely priced the decision in prior to the event.

“What did catch traders off guard was the number of rate hikes the Fed is forecasting for next year which would suggest markets are still a little behind the curve.”

He added: “What is more important though is that, despite the Fed signalling a desire to raise interest rates at a faster pace, there was no panic in the markets which shows the level of confidence investors have in the economy to handle it. Rate hikes are finally seen as a positive once again rather than something that’s going to kill any rallies.”

At 3.15pm, the UK blue chip index was up 25 points to 6,974, just below the session peak, with internationally-focused stocks benefitting as sterling dropped by over 1 cent against the strong US dollar on the Fed move. 

Takeover matters were to the fore in London, with pay-TV giant Sky (LON:SKY) seeing its shares slip 2.5p lower to 981.0p as shareholders hoping for any more cash from Rupert Murdoch's 21st Century Fox (NASDAQ:FOXA) were disappointed after the formal bid landed at the same price as indicated last Friday.

Fox has tabled a 1,075p a share cash bid for Sky, backed by the FTSE 100-listed firm’s independent directors, in its second attempt to buy the 61% of the group that it does not currently own.

The stock soared 40% higher on Friday the on back of the indicative move, but has drifted back ever since with no alternative to the Fox move likely.

In other bid moves, Punch Taverns (LON:PUB) saw its shares jump nearly 9% higher, up 1.575p to 192.75p as a private equity firm backed by Dutch brewing giant Heineken launched a near £1.8bn takeover bid for the UK pubs operator.

The 180p a share cash offer from Patron Capital has been agreed by the pub group's three largest shareholders who along with the Punch directors own 52.3% of the shares.

12.30pm ...BoE indecison 

The Footsie ticked slightly higher at lunchtime but largely remained moribund with little reaction to news that the Bank of England has left UK interest rates on hold once again, a day after the Federal Reserve hiked US rates for the first time in a year.

Kerim Derhalli, CEO and founder of invstr, said: “There was a train of thought among analysts that Mark Carney would follow the Fed’s lead and raise interest rates particularly as, in the UK, common perceptions of Brexit seemed to have passed from shock, to denial, to a sense that everything might just be okay.”

But, he added: “In the current climate, the Bank of England was right to hold fire.

“Some stronger-than-expected economic data in the weeks and months since the referendum vote have provided a dose of contentment, but there will continue to be many twists and turns in this story as the political and economic ramifications play out.”

The FTSE 100 index was just up just 2 points at 6,952 at 12.30pm, while on currency markets the pound dropped half a cent versus a resurgent US dollar, although sterling gained a similar amount versus the euro.

11.30am...Sluggish

It was the morning after the night before; and I’m not talking here about the Proactive Christmas party, which has left a few of us here in the Dungeon walking around woolly-headed.

Traders appeared a tad sluggish with volumes down to a trickle and the FTSE 100 almost static at 6,945.96 following the US Federal Reserve’s anticipated hike to the base rate.

The quoted shopkeepers failed to respond to a surprise 0.2% rise in November’s retail sales, aided the Black Friday stampede late in the month.

Food and clothing volumes both dropped on a monthly basis. But this was more than compensated for by growth in department store sales, the Office for National Statistics numbers revealed.

The FTSE 250 temporary generator specialist Aggreko (LON:AGK) was one of the leading risers after a Deutsche Bank upgrade to ‘buy’.

Among the blue-chips the banks and the airlines were on the up, while the precious metal miners took a biffing following the Fed rate decision.

An agreement to an immediate discounted cash settlement of the share payments due from Bass Metals Ltd has boosted StratMin Global Resources PLC (LON:STGR).

The shares were up 9.1% at 1.5p as the company said the deal was the best possible platform for it ahead of initiating a reverse takeover.

It seems odd for a business advice company to disregard the City's guidelines on corporate governance, but that is what Management Consulting Group PLC (LON:MMC) has done in giving Nick Stagg, the chief executive, the role of chairman as well, after Alan Barber stepped down from the board.

The City does not like chief executives becoming chairmen, and marked the shares down 12%.

8.45am...drifting 

The FTSE 100 opened with little fanfare as it drifted 7 points lower to 6,942.46 in the wake of the US Federal Reserve’s well-flagged decision to raise base rates by a quarter of a percentage point.

The precious metal miners were the morning’s major casualties, tracking the price of gold lower following the Fed hike.

Mexico-focused Fresnillo (LON:FRES) tumbled 8%, followed by Randgold (LON:RRS) and Polymetal (LON:POLY).

Top of the leader board was Centrica (LON:CNA), buoyed by a stronger than expected trading statement.

The bank stocks were also in demand as the threat posed by the wobbly Italian financial sector receded.

6.45am...Footsie called lower

FTSE 100 is called to start lower on Thursday after the Fed raised interest rates overnight, as had been expected.

The US Central bank however caught some off guard by saying there would likely be a further three interest rate rises to come next year in 2017.

It was the first of the Fed's monetary policy committee meetings since Donald Trump became president in November, which has seen a stock market rally based on his promises to increase infrastructure investment and lower business tax.

Janet Yellen, Fed chair raised the rate 0.25% from 0.50 to 0.75%.

In London, FTSE 100 closed down 0.28% to 6,949 and the index is today called by spreadbetters to lose a further 19 points.

In Europe, stocks markets were also down, while the Dow Jones on Wall Street finished 0.6% down at 19,792, the Nasdaq ended 0.5% down and the S&P500 lost 18, at 2,253.

With an hour of trading to go, the Nikkei 225 added 0.10% to 19,273 and the Shanghai Composite Index lost 1.18% to 3,103.

In London, today focus will be on the Bank of England and its take on interest rates.

Michael Hewson, at CMC Markets, said its final Bank of England meeting of 2016 is likely to see them stick at 'hold' with the prospect that further rate cuts are off the table for the foreseeable future.

"If anything we might see the Monetary Policy Committee adopt a slightly less dovish tone, in an attempt to keep that floor under the pound that has been in place since the flash crash lows in October. The MPC will also have concerns over the prospect of higher inflation, given the moves higher in import prices that we’ve seen in the past few weeks, which has been reflected in sharply higher gilt yields." 

City headlines

  • 'Fed to step up the pace of interest rate rises next year' - The Telegraph
  • 'US Dollar surges  to 14-year high as Fed hints at three rate hikes in 2017' - The Guardian'
  • 21st Century Fox to make formal offer for Sky today' - The Times
  • 'Google and Facebook to take 71% of UK online ad revenue by 2020' -  The Guardian
 

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