- FTSE 100 fails to break last year's intraday high
- Rate hike speculation ramps up as UK unemployment falls
- Sage gains after confident outlook
- RBS drops after UBS downgrade to 'sell'
techMARK 2,847.95 +0.05%
FTSE 100 6,826.33 -0.12%
FTSE 250 16,147.17 +0.02%
The FTSE 100 finished more or less flat for a third straight day on Wednesday as a sharp fall in the UK unemployment rate was offset by rising speculation that the Bank of England (BoE) could begin to hike interest rates sooner than expected.
After swinging between gains and losses for most of the session, London's benchmark index closed down 7.93 points at 6,826.33, a fall of just 0.1%.
According to Chief Market Analyst Michael Hewson from CMC Markets, the Footsie "continues to struggle to make any headway beyond the highs that we saw last year at 6,875, with two failed attempts this week already". 6,875 is thought to be the only major resistance level keeping the index from breaking through to its record high of 6,930 reached in December 1999.
Sentiment was also dampened by a poor start on Wall Street as disappointing earnings from heavyweights IBM and AMD weighed on US markets.
US investors were also showing caution ahead of a busy day macro-wise tomorrow with the release of American manufacturing figures, existing-home sales, jobless claims and the leading indicators index. Data is being closely watched amid speculation that the Federal Reserve will continue to scale back its quantitative easing at its policy meeting next week.
UK jobless rate ramps up rate talk
Data revealed this morning that the unemployment rate in Britain eased to 7.1% in the three months up to November, down from 7.4% in the previous month and below the forecast of 7.3% by economists.
While the BoE has always assured that 7% unemployment - a level at which it would re-assess its policy stance - was only a threshold and not a 'trigger' for a rate rise, markets are now worried that the central bank could begin to tighten policy sooner rather than later.
Nevertheless, minutes from January's Monetary Policy Committee (MPC) meeting this morning showed that policymakers see no "immediate need" to lift rates even if the 7% threshold is hit in the future.
However, Economist Daniel Vernazza from UniCredit Research said: "As a result of today's news, we expect the unemployment rate to fall to 7% in the next quarter and that the BoE will raise Bank Rate at the start of 2015."
In other economic news, UK public-sector net borrowing excluding financial interventions fell to £12.1bn in December, down from £16.8bn the month before and under the £14bn forecast.
Sage jumps, RBS sinks
Accountancy software group Sage surged after saying that it is on track to hit its medium-term revenue targets after an in-line first quarter. The company said that "good growth" was maintained across all of its regions during the period.
RBS was lower after UBS downgraded the stock from 'neutral' to 'sell', saying that the current share price already discounts much of the progress expected to be made from restructuring over the next 18 months. As such, there is a "risk of underperformance even if management outperforms business targets", UBS said.
Mining stocks were mixed today, though BHP Billiton swung into the red after an underwhelming quarterly production report. BHP was also under pressure after a downgrade by HSBC to 'neutral'.
In contrast, Numis Securities gave Admiral a lift after upgrading the stock to 'buy', saying that it sees further upside for car insurance stocks as confidence in earnings, dividends and growth improves.
Meanwhile, Petra Diamonds was extending gains after saying yesterday that it has received a 29.6-carat blue diamond at the Cullinan mine in South Africa. The miner said the stone is an "outstanding vivid blue with extraordinary saturation, tone and clarity, and has the potential to yield a polished stone of great value and importance".
FTSE 100 - Risers
Sage Group (SGE) 426.90p +3.34%
Admiral Group (ADM) 1,460.00p +3.18%
Johnson Matthey (JMAT) 3,440.00p +2.53%
easyJet (EZJ) 1,743.00p +1.93%
Stock Exchange Group (LSE) 1,854.00p +1.87%
Standard Life (SL.) 390.10p +1.61%
Reckitt Benckiser Group (RB.) 4,825.00p +1.49%
ARM Holdings (ARM) 1,004.00p +1.31%
International Consolidated Airlines Group SA (CDI) (IAG) 437.00p +1.30%
Hammerson (HMSO) 531.50p +1.24%
FTSE 100 - Fallers
William Hill (WMH) 341.60p -3.88%
Royal Bank of Scotland Group (RBS) 348.00p -3.06%
Mondi (MNDI) 969.00p -2.42%
Fresnillo (FRES) 754.50p -2.33%
BG Group (BG.) 1,312.50p -2.20%
Travis Perkins (TPK) 1,820.00p -2.05%
RSA Insurance Group (RSA) 100.20p -1.96%
SSE (SSE) 1,317.00p -1.72%
SABMiller (SAB) 3,039.00p -1.52%
Amec (AMEC) 1,038.00p -1.52%
FTSE 250 - Risers
Petra Diamonds Ltd.(DI) (PDL) 134.90p +7.92%
Keller Group (KLR) 1,230.00p +5.40%
Greencore Group (GNC) 253.00p +4.24%
Daejan Holdings (DJAN) 4,998.00p +3.16%
F&C Asset Management (FCAM) 93.20p +3.15%
Kentz Corporation Ltd. (KENZ) 677.00p +2.81%
IP Group (IPO) 179.90p +2.80%
WH Smith (SMWH) 1,043.00p +2.66%
TalkTalk Telecom Group (TALK) 325.80p +2.65%
Wetherspoon (J.D.) (JDW) 809.00p +2.53%
FTSE 250 - Fallers
Essar (ESSR) 64.25p -4.18%
Tullett Prebon (TLPR) 368.00p -3.92%
African Barrick Gold (ABG) 199.50p -3.39%
Kazakhmys (KAZ) 179.80p -3.07%
Home Retail Group (HOME) 195.60p -3.07%
Millennium & Copthorne Hotels (MLC) 570.00p -2.90%
COLT Group SA (COLT) 122.50p -2.85%
Ladbrokes (LAD) 154.60p -2.52%
Bellway (BWY) 1,595.00p -2.39%
ICAP (IAP) 424.40p -2.35%