London's FTSE 100 finished with moderate gains on Wednesday afternoon ahead of a key vote over the potential extension of the debt ceiling Stateside, as some decent results from US bellwethers Google, McDonald's and IBM lifted sentiment across stock markets worldwide.
The US House of Representatives is to vote this evening on whether to extend the government's debt ceiling until May 19th. A White House spokesman said that President Barack Obama "won't stand in the way" of this short-term fix.
"The vote is yet another case of kicking the can down the road, something the US lawmakers have opted for on numerous occasions now in order to avoid agreeing on a long term solution," said market analyst Craig Erlam from Alpari.
"If we do see the bill passed, there's likely to be little reaction in the markets, with investors more concerned with fourth quarter corporate earnings at this moment in time. In the longer term the markets will probably just ignore these negotiations as it's now clear that an inability to come to an agreement will never lead to a default, just a change in the deadline," he said.
For the time being, traders will likely focus on tech giant Apple's results after the closing bell this evening. Earnings are widely expected to fall year-on-year due to a drop in the gross margin, however the market's attention will undoubtedly be on the company's outlook for 2013 amid concerns over disappointing smartphone sales as of late.
In other news, the International Monetary Fund (IMF) has slashed its growth forecasts for the global economy, saying that the upturn is expected to be 'more gradual' than previously thought. The IMF expects world output in 2013 and 2014 to expand by 3.5% and 4.1%, respectively, down 0.1 percentage point from earlier forecasts.
Markets shrug off Cameron speech
UK Prime Minister David Cameron's much-anticipated 'in-or-out-case' speech on Britain's membership in the European Union didn't really move markets this morning.
He committed his party to holding a referendum on whether the UK should remain in the EU in the first half of the next parliament (by the end of 2017 at the latest). "It is time for the British people to have their say; it is time to settle this question over Britain and Europe," Cameron said.
Financial trader Shavaz Dhalla from Spreadex said this morning that Cameron's speech "proved futile". He said: "European markets took the speech in their stride and digested enough information to gauge that the speech was probably designed to build momentum for Cameron's next campaign rather than mount a serious economic backing for whether remaining in the EU is worthwhile."
BoE in wait-and-see mode
Minutes from the latest Bank of England policy meeting showed that members voted eight-to-one in favour of leaving the asset purchase programme unchanged at £375bn. The Monetary Policy Committee (MPC) voted unanimously to keep the Bank Rate at 0.5%.
Analyst Chris Crowe from Barclays Research said that the MPC is "still content to wait and see" with the committee "likely to resist expanding QE as long as the economy shows signs of stabilisation and improvement."
Meanwhile, the UK jobless rate fell from 7.8% to 7.7% in the three months to November, better than the consensus estimate for no change. The UK claimant count fell by 12,100 in December to 1.56m, the lowest since June 2011.
FTSE 100: Unilever impresses with 2012 sales record
Consumer products titan Unilever was on the up after double-digit growth in emerging markets helped push its turnover past the €50bn-mark in 2012, the first time this milestone has been reached. Revenue growth was 10.5% last year.
Tullow Oil was also a high riser, a day after the company said it completed the acquisition of Spring Energy Norway AS. The group announced that the acquisition had already brought success for Tullow.
Following close behind was Marks & Spencer amid rumours of a takeover bid following bleak sales updates.
Travel and leisure group TUI Travel was a heavy faller after its Germany parent company TUI AG said it has no intention of making an offer. TUI Travel said last week that it had received an approach from TUI AG, which owns a 56.4% stake in the firm.
Utilities group SSE followed close behind after announcing Chief Executive Ian Marchant would step down after 10 years in the role. The stock also went ex-dividend today.
Compass Group, also ex-div today, dropped following recent damning comments from Portuguese investment bank Espirito Santo which said the company will lose its direction in 2013.
Real estate investment trust Land Securities edged lower despite saying that the third quarter saw a "strong operating performance across our investment portfolio".
Business software firm Sage was down despite an in-line trading statement. The group said that revenue trends had varied across its geographies, with good growth seen in the UK and Ireland and challenging conditions noted in mainland Europe.
Diversified mining giant BHP Billiton was wanted after saying it expects to deliver a compound annual growth rate of 10% in copper equivalent terms over the next two years.
FTSE 250: Afren provides a lift
Oil and gas company Afren was extending gains after impressing the market on Monday with record results. The African-focused group earlier this week reported strong production and financial performance following exploration success in Nigeria and the Kurdistan region of Iraq.
Oil and gas group EnQuest was in demand after agreeing with CIECO Energy UK to acquire two of its affiliate companies which together hold a total of 8.0% non-operated interest in the producing oil field Alba.
Bumi was also higher despite the bad press surrounding the company as co-founder Nat Rothschild continued to butt heads with the board and the Bakrie family.
Meanwhile, house-builders were firmly out of favour after JPMorgan Cazenove dampened the sector with a series of downgrades. The US broker cut its rating for Taylor Wimpey, Redrow, Bovis Homes, Bellway and Barratt Developments today, causing stocks to fall.
FTSE 100 - Risers
Tullow Oil (TLW) 1,195.00p +3.46%
Unilever (ULVR) 2,526.00p +3.06%
Marks & Spencer Group (MKS) 379.10p +2.54%
Petrofac Ltd. (PFC) 1,735.00p +2.06%
Standard Chartered (STAN) 1,669.50p +1.99%
Croda International (CRDA) 2,358.00p +1.77%
BP (BP.) 463.25p +1.71%
Intertek Group (ITRK) 3,067.00p +1.62%
Tate & Lyle (TATE) 825.00p +1.60%
Diageo (DGE) 1,865.00p +1.58%
FTSE 100 - Fallers
TUI Travel (TT.) 278.00p -4.83%
SSE (SSE) 1,382.00p -3.69%
Standard Life (SL.) 336.30p -1.98%
Compass Group (CPG) 746.00p -1.78%
ITV (ITV) 113.50p -1.65%
Anglo American (AAL) 1,869.00p -1.61%
International Consolidated Airlines Group SA (CDI) (IAG) 208.30p -1.56%
Lloyds Banking Group (LLOY) 52.02p -1.51%
Wolseley (WOS) 2,896.00p -1.50%
Melrose Industries (MRO) 243.50p -1.50%
FTSE 250 - Risers
Afren (AFR) 152.00p +9.20%
EnQuest (ENQ) 129.70p +4.26%
Bumi (BUMI) 337.40p +3.98%
Stobart Group Ltd. (STOB) 100.30p +3.19%
Domino Printing Sciences (DNO) 640.00p +3.06%
Dignity (DTY) 1,155.00p +2.94%
Menzies(John) (MNZS) 681.50p +2.79%
RIT Capital Partners (RCP) 1,203.00p +2.56%
Micro Focus International (MCRO) 620.00p +2.48%
Hikma Pharmaceuticals (HIK) 798.50p +2.18%
FTSE 250 - Fallers
Redrow (RDW) 184.00p -4.32%
St. Modwen Properties (SMP) 225.10p -3.84%
Big Yellow Group (BYG) 368.00p -3.64%
Barratt Developments (BDEV) 218.40p -3.62%
Taylor Wimpey (TW.) 70.65p -3.55%
TalkTalk Telecom Group (TALK) 232.40p -3.49%
Man Group (EMG) 93.20p -3.32%
Enterprise Inns (ETI) 96.00p -3.27%
Carillion (CLLN) 308.00p -2.93%
Petropavlovsk (POG) 388.60p -2.56%