- Markets pull back sharply after UK data
- Fall in unemployment sparks rate speculation
- Sage rises after confident update
- RBS hit by UBS downgrade to 'sell'
techMARK 2,852.20 +0.20%
FTSE 100 6,825.74 -0.12%
FTSE 250 16,130.75 -0.08%
UK markets had erased gains by Wednesday lunchtime as concerns about a sooner-than-expected hike in interest rates outweighed an improved situation for the UK labour market.
The FTSE 100 was trading down 0.1% at 6,826 by midday, pulling back sharply after having come close to last year's intraday high of 6,875 in early trade.
The 2013 high, set in May, is "the only historical resistance to break before taking on all-time high recorded back in 1999", according to Toby Morris, Senior Sales Trader at CMC Markets.
Data revealed this morning that the unemployment rate in Britain eased to 7.1% in the three months November, down from 7.4% the previous month and below the forecast of 7.3% by economists.
While the Bank of England 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.
"We think that there is a strong chance that the Committee will alter its forward guidance alongside next month's Inflation Report in order to provide the recovery with more support," said UK Economist Samuel Tombs from Capital Economics.
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 this morning 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.
After a strong start, mining stocks largely gave up their early gains as risk appetite was scaled back. Randgold Resources and Rio Tinto were still among the best performers, but BHP Billiton swung into the red after an underwhelming quarterly production report. BHP was also under pressure from a downgrade by HSBC to 'neutral'.
HSBC also lowered its recommendations for both public-sector services firm Serco and miner African Barrick Gold to 'neutral'.
In contrast, Numis Securities gave Admiral a lift after upgraded the stock to 'buy', saying that it sees further upside for car insurance stocks as confidence in earnings, dividends and growth improves.
Books and stationery retailer WH Smith was higher after reporting a less-than-expected decline in underlying sales from its Travel division.
UK pub operator JD Wetherspoon rose after a strong pick-up in like-for-like revenue growth in the second quarter covering the key Christmas period.
Property company Grainger was higher after receiving planning permission to build 84 new homes in Kensington and Chelsea, London.
A number of stocks were trading lower after going went ex-dividend this morning, including Compass and IG Group.
FTSE 100 - Risers
Sage Group (SGE) 430.50p +4.21%
Admiral Group (ADM) 1,456.00p +2.90%
ARM Holdings (ARM) 1,012.00p +2.12%
Randgold Resources Ltd. (RRS) 4,183.00p +1.73%
Hammerson (HMSO) 533.00p +1.52%
Antofagasta (ANTO) 831.00p +1.40%
Tullow Oil (TLW) 901.50p +1.35%
International Consolidated Airlines Group SA (CDI) (IAG) 437.20p +1.34%
Rio Tinto (RIO) 3,268.50p +1.15%
Carnival (CCL) 2,580.00p +1.06%
FTSE 100 - Fallers
Royal Bank of Scotland Group (RBS) 347.30p -3.26%
William Hill (WMH) 346.30p -2.56%
BG Group (BG.) 1,309.00p -2.46%
Prudential (PRU) 1,307.00p -1.95%
RSA Insurance Group (RSA) 100.40p -1.76%
SABMiller (SAB) 3,034.00p -1.69%
SSE (SSE) 1,322.00p -1.34%
Wolseley (WOS) 3,468.00p -1.34%
Compass Group (CPG) 965.00p -1.33%
Weir Group (WEIR) 2,145.00p -1.33%
FTSE 250 - Risers
Grainger (GRI) 228.10p +2.89%
Keller Group (KLR) 1,200.00p +2.83%
TalkTalk Telecom Group (TALK) 324.70p +2.30%
IP Group (IPO) 179.00p +2.29%
Wetherspoon (J.D.) (JDW) 807.00p +2.28%
WH Smith (SMWH) 1,038.00p +2.17%
Telecity Group (TCY) 778.50p +1.76%
Cairn Energy (CNE) 267.80p +1.63%
Vedanta Resources (VED) 923.00p +1.60%
Petra Diamonds Ltd.(DI) (PDL) 127.00p +1.60%
FTSE 250 - Fallers
NMC Health (NMC) 468.40p -4.02%
Ladbrokes (LAD) 153.50p -3.22%
Aveva Group (AVV) 2,262.00p -2.42%
African Barrick Gold (ABG) 202.10p -2.13%
Investec (INVP) 423.70p -2.08%
Brewin Dolphin Holdings (BRW) 303.00p -2.07%
Essar Energy (ESSR) 65.70p -2.01%
COLT Group SA (COLT) 123.60p -1.98%
Halfords Group (HFD) 474.00p -1.96%
Perform Group (PER) 244.00p -1.93%