By Carla Mozee, MarketWatch
U.K. jobless rate unexpectedly increases; wage growth to rise,
says BOE officials
U.K. stocks finished higher Wednesday, reversing course as gains
for shares of Lloyds Banking Group PLC and Glencore PLC, which
released financial updates, accelerated during the session.
Stocks in London overcame the losing tone set early by U.S.
stocks, which snapped a win streak in the previous session.
Meanwhile, the pound was whipped around after economic data and
parliamentary testimony by Bank of England policy makers.
How markets moved
The FTSE 100 indexrose 0.5% to end at 7,281.57. The moves came
as industrial, consumer services, health care and utility stocks
joined the basic materials and financial sectors in gaining ground.
The consumer goods, oil and gas and telecom sectors fell. On
Tuesday, the index closed down less than 1 point
(http://www.marketwatch.com/story/ftse-100-sags-as-investors-hesitate-after-hsbc-bhp-results-2018-02-20).
The poundtraded at $1.3951, down from $1.3997 late Tuesday in
New York.
The yield on the 10-year gilt fell 1 basis point to 1.55%,
according to Tradeweb. Yields fall when prices rise.
Check out: More investors looking to cut U.K. assets as Brexit
uncertainty persists
(http://www.marketwatch.com/story/more-investors-looking-to-cut-uk-assets-as-brexit-uncertainty-persists-2018-02-16)
What's driving markets
An early decline in London blue-chips had followed the track lay
down by Wall Street, with U.S. stocks on Tuesday snapping a six-day
winning streak
(http://www.marketwatch.com/story/dow-futures-fall-more-than-100-points-signaling-jittery-return-to-trading-2018-02-20).
The U.S. market has been in focus after fronting a global selloff
in equities earlier this month. But U.S. stocks on Wednesday were
stepping back into recovery mode, providing a lift for broader
European stock markets .
Shares of Lloyds Banking Group, among the top 10 biggest
components of the FTSE 100, bulked up as the session wore on. In
the bank's first full-year results since returning to full private
ownership, pretax profit climbed, although it was below
expectations.
"Waiting in the wings is a dividend yield of 4% (projected 6.6%)
which may return the bank to the halcyon days of being an
investor's core-portfolio essential, given the generous and stable
dividend," said Richard Hunter, head of markets at Interactive
Investor, in a note.
The pound early Wednesday hit an intraday low of $1.3905 after
data showed the U.K.'s unemployment rate unexpectedly rose to 4.4%
in the final quarter of 2017. The labor-market data is seen as
playing a part in the Bank of England's decision-making on the path
of interest rates. In November, the central bank raised rates for
the first time in a decade, in the face of hotter inflation that
currently stands at 3%.
But the pound in afternoon trade briefly topped $1.40 as BOE
officials at a parliamentary committee hearing said they soon
expect to see strengthening in salaries for Britons.
Economic data
As well as posting the jobless rate, the Office for National
Statistics said wages in the three months to December grew by an
average 2.5%
(http://www.marketwatch.com/story/uk-jobless-rate-unexpectedly-increases-2018-02-21).
Bank of England policy makers, at a Treasury committee meeting
in London, reaffirmed their view that pay growth is on the rise.
Andrew Haldane, the central bank's chief economist, said wage
pressures were weak early in 2017, and, "arithmetically, given what
we've seen over the past few months, it's very likely average
weekly earnings growth will nudge up to have a '3' in front of it,
which is our forecast for Q1."
Minutes from the Federal Reserve's January policy meeting, the
last chaired by Janet Yellen, are due at 2 p.m. Eastern Time, or 7
p.m. London time. These will be combed for clues to the central
bank's thinking on interest rates, which can have a knock-on effect
on global financial markets.
Read:Five things to watch in the Fed minutes
(http://www.marketwatch.com/story/five-things-to-watch-in-the-fed-minutes-2018-02-20)
What strategists said
"Lloyds is grabbing the attention of the markets today," said
Joshua Mahony, market analyst at IG, in a note. "Question-marks
over whether the government's stake would hold the firm back have
been firmly answered, with the bank posting the highest pre-tax
profit since 2006," he said.
"With the Bank of England pointing towards three rate hikes in
the coming years, there is reason to believe that Lloyds will
emerge as one of the main investment plays to take advantage of
that shift given their recent re-emergence into fully private
hands."
Stock movers
Lloyds (LLOY.LN) climbed 2.8% after the lender said it's
launching a share buyback of up to GBP1 billion ($1.40 billion)
(http://www.marketwatch.com/story/lloyds-launches-1-billion-buyback-2017-profit-up-2018-02-21).
Pretax profit of GBP5.28 billion for 2017 missed expectations of
GBP5.89 billion.
Glencore PLC shares (GLEN.LN) leapt 5.2%. The miner and
commodities trader posted a more than fourfold rise in 2017 net
profit for 2017
(http://www.marketwatch.com/story/glencore-profit-up-fourfold-for-2017-beats-views-2018-02-21),
of $5.78 billion, and said it was considering acquisitions.
Barratt Developments PLC shares (BDEV.LN) rose 0.9% after
turning lower during the session. The home builder raised both its
regular and special dividends
(http://www.marketwatch.com/story/barratt-lifts-dividends-after-profit-rises-2018-02-21).
It also said first-half pretax profit rose as it sold more plots at
higher prices.
AA PLC shares (AA.LN) on the midcap FTSE 250 index plunged 28%
as the roadside assistance slashed its dividend and issued a profit
warning.
(END) Dow Jones Newswires
February 21, 2018 12:41 ET (17:41 GMT)
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