- Interest rates to stay low for long time, says Yellen
- Fed tapers QE by a further $10bn
- UK retail sales fall 0.5% in May
- Rolls-Royce unveils £1bn buyback
techMARK 2,826.40 +0.77%
FTSE 100 6,832.94 +0.80%
FTSE 250 15,794.83 +1.09%
Strong gains from Rolls-Royce, SuperGroup and housing stocks gave UK markets a boost on Thursday, with sentiment helped by dovish comments from the Federal Reserve.
The FTSE 100 was up 0.8% at 6,833 by around midday, rising for the third straight day after hitting a seven-week low of 6,754.64 on Monday.
The Federal Open Market Committee tapered stimulus by a further $10bn a month on Wednesday, as expected, explaining that economic activity is "rebounding" amid an improvement in the jobs market.
Nevertheless, Fed Chair Janet Yellen sounded a dovish tone by saying that stimulus is still needed given that the "underutilisation in the labour market remains significant". She also said that while officials' projections for rate rises have increased, rates will continue to stay low for a "considerable time" after bond buying ends.
Market Analyst Craig Erlam from Alpari UK said that the Yellen's comments were "exactly what the markets wanted to hear". He said: "Clearly, we've all moved past quantitative easing now and are far more concerned with interest rates, both the timing of the first hike and the path for future increases. When it comes to this, Yellen said all the right things."
UK retail sales fell in May for the first time since January, although the dip was less than analysts expected as World Cup football kit sales boosted the figures. Sales fell 0.5% in May compared with April, although the decline was less than the 0.6% retreat forecast by analysts, according to Britain's Office for National Statistics.
In other economic news, data before the opening bell on Wall Street is expected to show that US jobless claims edged lower to 314,000 last week, from 317,000 the week before. US stock futures were flat after the S&P 500
hit its 20th record close of the year on Wednesday.
Rolls-Royce, SuperGroup, housing stocks
Jet engine maker Rolls-Royce jumped after pledging to buy back £1bn of shares
if it succeeds in selling its energy gas turbine and compressor business to Germany's Siemens. The company also outlined plans to reduce capital spending in the next five years.
Clothing retailer SuperGroup jumped this morning as sentiment begins to recover after a recent sell-off. The stock had dropped by more than a third since its last trading update in early May, but analysts such as those at Canaccord Genuity said that the recent weakness represents a "buying opportunity". They said the "brand [is] still in fashion, even if shares aren't".
Housing and construction stocks were also rebounding after share prices
sunk last week on concerns about a sooner-than-expected rise in interest rates in the UK. Barratt Developments, Ashtead, CRH, Travis Perkins and Taylor Wimpey were all in positive territory after Bank of England policymaker Martin Weale said he didn't see the need for an immediate rate hike.
Software group Micro Focus rose after saying it enjoyed a solid year of progress, with growth picking up in the second half. Annual profits fell 2.4% on a reported basis but were 0.8% higher at constant currency, beating estimates. Investec upgraded the shares from 'hold' to 'buy' this morning.
FTSE 100 - Risers
Rolls-Royce Holdings (RR.) 1,070.00p +5.94%
CRH (CRH) 1,660.00p +3.04%
Barratt Developments (BDEV) 355.40p +2.90%
Mondi (MNDI) 1,097.00p +2.52%
Aberdeen Asset Management (ADN) 444.40p +2.25%
Ashtead Group (AHT) 848.50p +2.23%
Travis Perkins (TPK) 1,616.00p +2.21%
Weir Group (WEIR) 2,685.00p +2.21%
BHP Billiton (BLT) 1,913.50p +2.08%
Kingfisher (KGF) 371.00p +2.01%
FTSE 100 - Fallers
Shire Plc (SHP) 3,757.00p -0.74%
Lloyds Banking Group (LLOY) 77.44p -0.28%
Vodafone Group (VOD) 197.55p -0.28%
Standard Chartered (STAN) 1,280.50p -0.19%
FTSE 250 - Risers
Supergroup (SGP) 944.00p +8.51%
Man Group (EMG) 104.60p +5.50%
Renishaw (RSW) 1,721.00p +5.32%
Micro Focus International (MCRO) 878.00p +5.21%
Xaar (XAR) 525.00p +5.00%
Hunting (HTG) 873.50p +4.86%
Bank of Georgia Holdings (BGEO) 2,410.00p +4.78%
Caledonia Investments (CLDN) 2,235.00p +4.39%
Go-Ahead Group (GOG) 2,270.00p +4.27%
Bovis Homes Group (BVS) 762.50p +4.10%
FTSE 250 - Fallers
Rank Group (RNK) 163.20p -2.86%
Euromoney Institutional Investor (ERM) 1,123.00p -2.09%
Barr (A.G.) (BAG) 619.00p -1.90%
Fisher (James) & Sons (FSJ) 1,320.00p -1.49%
African Barrick Gold (ABG) 212.00p -0.98%
Informa (INF) 493.10p -0.96%
RPC Group (RPC) 641.00p -0.93%
KCOM Group (KCOM) 93.50p -0.90%
Ferrexpo (FXPO) 129.40p -0.84%
Cranswick (CWK) 1,216.00p -0.82%