- UK and US data beats expectations
- UK QE off the table for November's meeting, say analysts
- Miners provide a drag on the Footsie
Stocks pared gains to finish flat by the close on Thursday despite a barrage of better-than-expected data the world over - including UK gross domestic product (GDP) figures - and upbeat speculation about Asia's largest economies, China and Japan.
Markets were initially given a lift this morning after it was announced that the UK economy expanded by 1.0% in the third quarter, compared with the 0.4% decline seen in the second quarter and well ahead of the 0.6% increase expected. That was the strongest reading since late 2007 and means that the economy exited from its double-dip recession.
Following the above analysts at Barclays Research, Citi and Investec now expect quantitative easing (QE) to be off the table at the next Monetary Policy Committee (MPC) meeting. Meantime however, their peers at Capital Economics, RBC and Credit Agricole believe further QE is still a possibility (Nomura is forecasting that the next move will materialize towards the start of 2013).
Even so, the fact is that even before these latest figures consensus expectations were already relatively quite low -towards 60%- regarding the possibility for further QE come November, according to a poll by Reuters conducted last week.
Barclays said: "Should the domestic or economic situation deteriorate significantly, we would expect the MPC to undertake additional QE, as Governor King signalled in his speech this week. However, with underlying growth apparently stronger than previously expected, the November Inflation Report is unlikely to signal a pronounced bias towards loosening. In the absence of a renewed stalling in the recovery, we expect this month's asset purchases to be the last [versus the £50bn extension to QE previously forecast]."
Be that as it may, the Financial Times writes today that the central bank ought to consider other, potentially more effective, non-standard measures.
On a more positive note, China's Ministry of Industry and Information Technology said today that the Chinese industry sector performance has shown "signs of stabilisation". The Ministry said that fourth-quarter industrial output growth may be faster than that seen in the third "which will help the country to achieve its annual economic growth target of 7.5%".
Meanwhile, reports from a Japanese newspaper that the Bank of Japan would boost stimulus were also helped to lift markets higher today. According to the Nikkei newspaper, Japan will up its asset purchase programme by 10trn yen to 90trn yen at its policy meeting on October 30th.
US jobless claims and durable goods orders came in better than forecasts today, a good sign ahead of the big one, the US gross domestic product report, due out tomorrow afternoon. Consensus forecasts are for an annualised expansion of 1.9% in the third quarter, an acceleration from the 1.3% growth in the preceding three months.
FTSE 100: Carnival and Unilever gain but resources provide a drag
Cruise operator Carnival jumped in afternoon trade, buoyed by news that its US rival Royal Caribbean has raised its full-year forecast.
Consumer products giant Unilever was in demand after underlying sales growth beat expectations in the third quarter, helped by a strong performance in the emerging markets.
However, mining stocks were heavily out of favour this afternoon, with Evraz, ENRC and Kazakhmys registering steep falls. However, precious metals producer Fresnillo bucked the trend after approving the feasibility study for the development of the $500m San Julian silver project in Mexico.
Oil giant Royal Dutch Shell was down after announcing that it is looking to buy Hess Corporation's stakes in the Beryl area fields and the Scottish Area Gas Evacuation Systems (SAGE) in the North Sea for $525m.
Also lower was media giant WPP after it admitted its third-quarter growth was slower than that seen in the second quarter, which also came in short of expectations, while the fourth quarter is set to slow further.
ARM Holdings was in the red as investors took profits following the previous two day's surge; the stock is now up around 12% on the week after after the chip designer beat forecasts in the third quarter and gave a confident outlook for the rest of the year.
Speciality chemicals group Johnson Matthey was given a boost after sector peers BASF and AZ Electronic Materials reiterated their full-year targets.
FTSE 250: Debenhams leads after full-year results
Department store group Debenhams surged after the company reported resilient full-year results and said it would be continuing its share buy-back programme for the next 12 months amidst 'challenging' conditions for the British consumer.
Speciality chemicals producer AZ Electronic Materials also jumped after maintaining full-year guidance, saying that it made "solid progress" in the third quarter despite an uncertain macro-economic environment.
Oil and gas group Salamander Energy gained after saying the Bravo jacket is now en route to the Bualuang oil field, where the company's operated block B8/38 is located, in the Gulf of Thailand.
Bwin.party rose after saying that it has formed an exclusive partnership with social gaming provider Zynga to develop and operate real money online and mobile poker and casino services in the UK.
Essar Energy and New World Resources were both in decline following reports that an investigation into diesel pricing in underway.
FTSE 100 - Risers
Carnival (CCL) 2,505.00p +3.04%
Fresnillo (FRES) 1,930.00p +2.17%
Aggreko (AGK) 2,089.00p +2.10%
Unilever (ULVR) 2,310.00p +1.99%
International Consolidated Airlines Group SA (CDI) (IAG) 160.00p +1.78%
Wood Group (John) (WG.) 848.50p +1.74%
Johnson Matthey (JMAT) 2,253.00p +1.67%
Next (NXT) 3,618.00p +1.54%
Imperial Tobacco Group (IMT) 2,330.00p +1.48%
Babcock International Group (BAB) 953.50p +1.44%
FTSE 100 - Fallers
Evraz (EVR) 235.40p -5.95%
Eurasian Natural Resources Corp. (ENRC) 333.40p -2.40%
WPP (WPP) 789.50p -2.29%
Kazakhmys (KAZ) 736.00p -1.87%
ARM Holdings (ARM) 665.00p -1.55%
Royal Dutch Shell 'A' (RDSA) 2,088.50p -1.49%
Amec (AMEC) 1,034.00p -1.43%
Resolution Ltd. (RSL) 210.60p -1.13%
Royal Dutch Shell 'B' (RDSB) 2,165.00p -1.12%
Anglo American (AAL) 1,857.50p -1.04%
FTSE 250 - Risers
Debenhams (DEB) 119.00p +9.17%
F&C Asset Management (FCAM) 101.00p +6.88%
Bwin.party Digital Entertainment (BPTY) 125.50p +6.72%
Anite (AIE) 143.60p +6.37%
AZ Electronic Materials SA (DI) (AZEM) 336.00p +6.33%
Drax Group (DRX) 548.00p +5.38%
Salamander Energy (SMDR) 192.30p +5.37%
Pace (PIC) 170.00p +4.87%
Home Retail Group (HOME) 110.60p +4.64%
Oxford Instruments (OXIG) 1,337.00p +4.13%
FTSE 250 - Fallers
Kentz Corporation Ltd. (KENZ) 398.90p -3.37%
Bumi (BUMI) 249.00p -3.34%
Ruspetro (RPO) 102.70p -2.19%
Essar Energy (ESSR) 132.30p -2.00%
Petropavlovsk (POG) 416.70p -1.91%
Supergroup (SGP) 660.00p -1.64%
Cranswick (CWK) 760.50p -1.62%
Regus (RGU) 101.60p -1.45%
Hochschild Mining (HOC) 496.70p -1.45%
Hansteen Holdings (HSTN) 75.05p -1.25%