- BoE strikes dovish tone as wages fall
- Ukraine crisis, Asian data in focus
- Ex-dividend stocks limit upside
- G4s leads gains
techMARK 2,738.64 +0.38%
FTSE 100 6,656.68 +0.37%
FTSE 250 15,527.48 +0.40%
UK equities ended the session modestly higher after the overall dovish tone to the Bank of England's (BoE) Inflation Report gave UK stocks a lift on Wednesday, as investors shrugged off geopolitics and weak data from Asia to instead push back their expectations for the first rate hike.
"Today's Report comes across as a solid signal that the majority of BoE rate setters are planning to wait until next year before hiking rates, which poses a risk to our forecast of a November hike," said Rob Wood, chief UK economist at Berenberg.
After a slow start, the FTSE 100 was up 0.4% at 6,662 by midday, though ex-dividend stocks were limiting upside on the index.
Economic figures released on Wednesday morning showed that while the UK unemployment rate declined from 6.5% to 6.4% in the three months to July as expected, average weekly earnings slipped at an annual rate of 0.2% - below forecasts.and the first fall in five years.
As for the Inflation Report, BoE Governor Mark Carney lifted his forecast for economic growth this year and the next by one percentage point to 3.5% and 2.9%, respectively. However, the BoE simultaneously halved its estimate for pay, saying that average salaries will rise just 1.25% this year.
"The economy is returning to a semblance of normality, but whether normality in terms of real wages returns will depend on improvements in productivity," Carney said. He reiterated that whenever rates begin to increase, they would rise only gradually.
The Ukraine crisis was continuing to act as an uncertain backdrop for trading on Wednesday with 280 trucks allegedly carrying humanitarian aid on their way from Russia to the border. However, Ukraine has said that it would not allow the convoy to pass until it can determine what is inside the vehicles.
Asian data weakens
In China, industrial production, retail sales, money supply growth, fixed asset investment and new loans figures all came in worse than expected overnight. Loan growth in particular plunged from 1.08trn yuan to 385bn yuan in July, its lowest level since 2008 and well below the 780bn yuan forecast.
Japanese gross domestic product (GDP) declined at an annualised rate of 6.8% in the second quarter of 2014, a sharp turnaround from the revised 6.1% growth at the start of the year as a result of a hike in sales taxes. While this was not as bad as the 7% fall in GDP expected, it was Japan's worst contraction since 2011.
Ex-div stocks weigh, banks rise
A long list of blue chip stocks were lower on Wednesday after going ex-dividend, meaning that investors no longer qualify for their latest payouts. These included AstraZeneca, BG Group, GKN, IMI, Meggitt, Pearson, Rio Tinto, Schroders, Standard Chartered, Royal Dutch Shell, Fresnillo, Ashtead, BT Group and Diageo. According to Reuters, these stocks took up to 21.26 points off the index.
Banking stocks were among the best performers with RBS, Barclays and Lloyds making gains. The latter was in focus after it was reported that Chancellor George Osborne will rule out a pre-election sale of Lloyds Banking shares
to the general public, according to Sky News.
Car insurance specialist Admiral dropped after underwhelming with a 2% rise in adjusted profits before tax to £184.9bn in the first half as growth in the UK was partly offset by weakness abroad. The company also announced it has promoted Geraint Jones, who has held a number of senior finance positions, to chief financial officer.
Mining and trading giant Glencore fell after a mixed production report for the first half of 2014 with output of some commodities improving while others declined. However, production of copper and coal - the company's biggest contributors to profit - both increased over the year.
G4S led gains after winning £1.2bn of contracts in the first half and increasing profits. G4S, which faced strong criticism for failing to provide enough security guards at the 2012 Olympics and allegations of overcharging on a UK government prisoner tagging contract, said new contract wins had risen 26%.
FTSE 100 - Risers
G4S (GFS) 273.50p +5.27%
Coca-Cola HBC AG (CDI) (CCH) 1,328.00p +3.11%
Barratt Developments (BDEV) 350.80p +2.81%
Prudential (PRU) 1,404.00p +2.59%
easyJet (EZJ) 1,290.00p +2.54%
Land Securities Group (LAND) 1,066.00p +2.11%
Morrison (Wm) Supermarkets (MRW) 169.00p +2.11%
Vodafone Group (VOD) 197.20p +1.91%
Royal Bank of Scotland Group (RBS) 348.40p +1.87%
Johnson Matthey (JMAT) 3,014.00p +1.82%
FTSE 100 - Fallers
Admiral Group (ADM) 1,371.00p -5.45%
Rio Tinto (RIO) 3,423.50p -2.60%
Glencore (GLEN) 365.50p -2.53%
BT Group (BT.A) 368.60p -1.63%
Antofagasta (ANTO) 809.00p -1.52%
IMI (IMI) 1,346.00p -1.46%
Pearson (PSON) 1,105.00p -1.43%
Diageo (DGE) 1,717.00p -1.24%
GKN (GKN) 337.80p -1.14%
BG Group (BG.) 1,145.00p -0.95%
FTSE 250 - Risers
Just Eat (JE.) 262.00p +9.17%
COLT Group SA (COLT) 141.70p +4.19%
Thomas Cook Group (TCG) 123.00p +3.62%
Fenner (FENR) 360.50p +3.59%
Fidessa Group (FDSA) 2,295.00p +3.19%
Savills (SVS) 618.00p +3.00%
Evraz (EVR) 103.00p +2.90%
JD Sports Fashion (JD.) 405.00p +2.82%
Fidelity China Special Situations (FCSS) 116.00p +2.65%
Redrow (RDW) 247.10p +2.45%
FTSE 250 - Fallers
Perform Group (PER) 215.00p -5.70%
Direct Line Insurance Group (DLG) 281.10p -5.16%
Serco Group (SRP) 314.30p -4.90%
EnQuest (ENQ) 118.80p -4.73%
Oxford Instruments (OXIG) 1,200.00p -3.77%
AO World (AO.) 206.30p -3.55%
CSR (CSR) 512.50p -3.12%
Ocado Group (OCDO) 335.70p -2.61%
Greene King (GNK) 789.50p -2.47%
Countrywide (CWD) 501.50p -2.43%