London close: Economists nudge GDP forecasts higher

23rd Aug 2013 16:26

Equities moved moderately higher on the second to last Friday of the summer despite economic figures out in the afternoon which revealed a far larger than expected fall in new US home sales. Somewhat ironically, at least for now that won equity markets a small reprieve from the recent incessant climb in long-term US Treasury interest rates. Also worth pointing out, at least three Fed speakers today made relatively restrained remarks regarding the prospects for tapering come September. Of note, the Office for National Statistics [ONS] released its second estimate for second quarter growth on Friday, which showed that economic activity in Britain expanded at a 0.7% quarter-on-quarter pace. That was one tenth of a percentage point more than previously estimated. The rates of expansion in manufacturing and construction were both revised higher, with economists for the most part highlighting the now more broad-based nature of growth. Vicky Redwood, Chief UK Economist at Capital Economics had this to say in reaction to the latest numbers: "Looking ahead, the economy still faces some serious constraints (the fiscal squeeze, weak bank lending), so it may struggle to keep growing at quite such robust rates [...] Nonetheless, the outlook has become a bit brighter and we recently revised up our forecasts to 1.2% growth this year and 2% next."Investec also raised its growth forecasts for 2014 as a result, to 2.4% from 2.2% earlier. Interestingly, they pointed out the fact that the Office for Budget Responsibility's [OBR's] forecasts in the March Budget were +0.6% for this year and +1.8% for next, and that it is likely to raise its predictions come the Autumn Statement later this year. To be had in account, in a research note released late in the afternoon Philip Shaw, Victoria Clarke and Ryan Djajasaputra wrote to clients explaining to them that "[...] but if the relative steepness of the curve persists, the MPC could be tempted to restart quantitative easing [QE], with tangible downside for the pound." If officials in the US are sounding a tad more dovish - and as is so often the case - some of their peers over on the Continent are doing exactly the opposite. Speaking on the sides of the Jackson Hole symposium which kicks off today, European Central Bank Governing Council Member Ewald Nowotny said the recent "stream of good news" from the euro-area economy has removed any need to cut interest rates to a fresh record low, according to a report from Bloomberg TV.Acting as a backdrop, Sterling closed a tad lower versus the US dollar ahead of next Wednesday's speech from Bank of England Governor Mark Carney. He is expected by some to reinforce current "forward guidance," which may weigh on the currency. Croda gains after broker upgradeSpeciality chemicals firm Croda International was a high riser this morning after Deutsche Bank upgraded the stock to 'buy' and hiked its target price from 2,400p to 2,850p.Mining stocks such as Antofagasta, Fresnillo, Vedanta and Rio Tinto were in demand as metals' prices edged higher. BHP Billiton recovered to end the day higher after news that it has handed Chief Executive Andrew Mackenzie, who has been on the job for just three months, a £4.6m bonus.Banking stocks were under pressure but similarly turned up towards the end of trading. Overnight Moody's warned that it had placed ratings on the six-largest US banks on review for a possible downgrade. Barclays, HSBC and RBS were among the worst performers in London early in the session as a result. Oil and gas group Afren was in the red this morning after first-half profits sunk 16% year-on-year due to one-off costs. Nevertheless, revenues rose 2% despite a dip in the oil price as production grew strongly. The share price continues to be rebuffed upon any attempt at cracking technical resistance at 148p. WPP rallied after the advertising agency said its data investment business Kantar acquired The Benenson Strategy Group, a research and consulting firm. Reckitt Benckiser retreated as the firm had its 'reduce' rating reaffirmed by analysts at AlphaValue. Premier Oil ended down after Goldman Sachs lowered its valuation on Sea Lion to account for the later development plan. Their 12-month price target now goes down to 520p, but they did maintain their Buy rating.FTSE 100 - RisersCroda International (CRDA) 2,677.00p +4.29%Marks & Spencer Group (MKS) 471.60p +2.68%Sainsbury (J) (SBRY) 398.20p +2.55%WPP (WPP) 1,221.00p +2.52%Morrison (Wm) Supermarkets (MRW) 292.80p +2.31%SABMiller (SAB) 3,104.00p +2.02%Prudential (PRU) 1,142.00p +1.87%Petrofac Ltd. (PFC) 1,265.00p +1.85%Tesco (TSCO) 372.50p +1.83%Land Securities Group (LAND) 902.00p +1.75%FTSE 100 - FallersAggreko (AGK) 1,607.00p -2.90%easyJet (EZJ) 1,265.00p -0.94%Eurasian Natural Resources Corp. (ENRC) 223.60p -0.71%Persimmon (PSN) 1,133.00p -0.61%Experian (EXPN) 1,163.00p -0.51%Standard Life (SL.) 343.90p -0.46%Reckitt Benckiser Group (RB.) 4,499.00p -0.44%Shire Plc (SHP) 2,425.00p -0.41%Imperial Tobacco Group (IMT) 2,154.00p -0.23%Capita (CPI) 989.00p -0.20%FTSE 250 - RisersEvraz (EVR) 126.00p +5.26%African Barrick Gold (ABG) 166.40p +4.39%Euromoney Institutional Investor (ERM) 1,180.00p +3.51%Jardine Lloyd Thompson Group (JLT) 949.50p +3.43%Dechra Pharmaceuticals (DPH) 708.50p +3.43%Imagination Technologies Group (IMG) 278.60p +3.42%Centamin (DI) (CEY) 39.75p +3.22%Ashtead Group (AHT) 677.50p +3.20%Catlin Group Ltd. (CGL) 477.20p +2.84%Menzies(John) (MNZS) 757.50p +2.78%FTSE 250 - FallersNMC Health (NMC) 331.00p -5.43%Perform Group (PER) 503.50p -4.10%Tullett Prebon (TLPR) 331.00p -3.16%ITE Group (ITE) 289.30p -2.43%Cable & Wireless Communications (CWC) 40.64p -1.98%LondonMetric Property (LMP) 110.40p -1.69%Micro Focus International (MCRO) 786.00p -1.63%Beazley (BEZ) 203.60p -1.26%Hikma Pharmaceuticals (HIK) 1,077.00p -1.10%IP Group (IPO) 136.50p -1.09%FTSE TechMARK - RisersTriad Group (TRD) 16.50p +17.86%Gresham Computing (GHT) 115.50p +11.06%Torotrak (TRK) 27.75p +2.78%Phoenix IT Group (PNX) 150.00p +1.87%Consort Medical (CSRT) 834.50p +1.46%XP Power Ltd. (DI) (XPP) 1,390.00p +1.42%Sepura (SEPU) 149.50p +1.36%Ark Therapeutics Group (AKT) 0.48p +1.05%Innovation Group (TIG) 29.25p +0.86%Microgen (MCGN) 129.50p +0.39%FTSE TechMARK - FallersAntisoma (ASM) 1.52p -3.17%NCC Group (NCC) 133.50p -2.38%CML Microsystems (CML) 542.50p -1.36%E2V Technologies (E2V) 131.75p -1.31%RM (RM.) 82.00p -1.20%Kofax (KFX) 345.00p -0.86%Optos (OPTS) 156.50p -0.63%Skyepharma (SKP) 86.25p -0.29%Wolfson Microelectronics (WLF) 159.75p -0.16%IShares Euro Gov Bond 7-10YR UCITS ETF (IEGM) € 176.12 -0.05%