London close: Stocks increase as US GDP revised higher, Yellen signals rate hike

25th Sep 2015 17:09

(ShareCast News) - London stocks finished Friday's session in positive territory after figures US gross domestic product for the second quarter was unexpectedly revised higher, adding to the case for an interest rate hike later this year.The third and final estimate of second quarter US GDP was revised to show an annualised 3.9% increase, up from a previous estimate of 3.7%. Analysts had been expecting no change."The GDP numbers therefore confirm the Fed's rosy view that the US economy is in fine health," said Chris Williamson, chief economist at Markit. "However, this would be the Fed looking at the economy through the rear-view mirror once again. The recent survey data raise questions over the extent to which growth is already waning."A separate report showed US consumer confidence in September was higher than originally estimated but remained markedly below last month's level. The final reading of consumer sentiment was revised higher to 87.2 from a preliminary reading of 85.7, according to the University of Michigan, coming in slightly above analysts' expectations for a print of 87.0 but well below the 91.9 level reached in August.Momentum in the US services sector petered out in September, according to Markit. The seasonally adjusted Flash US Services purchasing managers' index declined from 56.1 to 55.6, in line with analysts' expectations.The data comes after Federal Reserve chair Janet Yellen said most Federal Open Market Committee members, herself included, anticipate an initial rate increase last this year followed by a gradual tightening thereafter.Speaking at the University of Massachusetts on Thursday evening, Yellen said she expects inflation to return to the Fed's 2% target over the next few years and that weak growth in emerging economies will not have a big enough impact on the US to influence policy."Which is ironic since the slowdown in China is one of the reasons that she gave in her post-meeting press conference for delaying a rate hike earlier this month," said Paul Ashworth, chief US economist at Capital Economics."Given that 13 of 17 officials think that rates will rise later this year, our base case scenario is still that the Fed will begin to hike rates in December. But a government shutdown or a debt ceiling stand-off could still scupper those plans."On home soil, the Bank of England's Ian McCafferty said he believed the best course of action to safeguard the economic recovery would be to raise interest rates . McCafferty, who was the only member of the Monetary Policy Committee to vote in favour of a rate hike this month, said concerns on China "should not be overstated"."By not delaying, we increase the likelihood of being able to normalise monetary policy only very gradually, thus minimising the potential shock," he wrote in The Times.In company news, Unilever gained as Berenberg lifted its stance on the stock to 'buy' from 'hold' with an unchanged price target of 3,050p.Lloyds Banking Group advanced on news the UK government cut its stake to 11.98% from 12.97% in August.Just Retirement rose as the company and fellow pension provide Partnership Assurance are to raise £150m in a share placing to help pay for their planned merger.Royal Bank of Scotland climbed after RBC Capital Markets upgraded RBS to 'sector perform' from 'underperform'. The stock also benefited from positive comments from Morgan Stanley, which replaced Barclays with RBS in its preferred names in the sector.Glencore snapped a rally earlier in the session after Bloomberg reported that the miner has hired banks to sell its stake in an agricultural unit. It said talks were under way with a dozen wealth funds and Asian trading houses. Bloomberg cited a person familiar with the matter as saying that the deal could value the whole unit at as much as $12bn. However the sentiment didn't last long, with the stock dropping back down to negative territory. Market MoverstechMARK 3,060.54 +2.14%FTSE 100 6,109.01 +2.47%FTSE 250 16,799.87 +1.73% FTSE 100 - RisersARM Holdings (ARM) 982.00p +5.99%Johnson Matthey (JMAT) 2,514.00p +4.84%St James's Place (STJ) 873.50p +4.42%Unilever (ULVR) 2,650.00p +4.41%International Consolidated Airlines Group SA (CDI) (IAG) 604.00p +4.14%Experian (EXPN) 1,061.00p +3.82%CRH (CRH) 1,823.00p +3.64%Intu Properties (INTU) 329.50p +3.62%Prudential (PRU) 1,392.00p +3.61%TUI AG Reg Shs (DI) (TUI) 1,221.00p +3.56% FTSE 100 - FallersAnglo American (AAL) 614.70p -1.58%Glencore (GLEN) 97.22p -1.41%Antofagasta (ANTO) 506.00p -1.08%Randgold Resources Ltd. (RRS) 3,926.00p -0.51%Fresnillo (FRES) 618.50p -0.40% FTSE 250 - RisersSynergy Health (SYR) 2,244.00p +42.03%Evraz (EVR) 72.80p +5.51%Indivior (INDV) 230.70p +5.39%Premier Oil (PMO) 67.15p +5.09%Ted Baker (TED) 3,165.00p +4.73%Card Factory (CARD) 399.00p +4.53%Debenhams (DEB) 79.00p +4.43%Jimmy Choo (CHOO) 147.00p +4.40%Man Group (EMG) 160.20p +4.30%Diploma (DPLM) 652.00p +3.99% FTSE 250 - FallersAggreko (AGK) 902.00p -3.17%Kaz Minerals (KAZ) 101.50p -3.15%Mitchells & Butlers (MAB) 322.30p -2.42%Riverstone Energy Limited (RSE) 920.00p -2.13%Acacia Mining (ACA) 246.00p -2.03%UDG Healthcare Public Limited Company (UDG) 508.50p -1.55%IP Group (IPO) 240.90p -1.31%Greencore Group (GNC) 287.50p -1.20%Woodford Patient Capital Trust (WPCT) 108.50p -1.18%Centamin (DI) (CEY) 63.00p -1.18% FTSE TechMARK - RisersBATM Advanced Communications Ltd. (BVC) 20.25p +6.58%Oxford Instruments (OXIG) 575.50p +3.32%Skyepharma (SKP) 363.00p +2.83%E2V Technologies (E2V) 229.00p +2.00%KCOM Group (KCOM) 90.00p +1.12%NCC Group (NCC) 268.00p +0.37%Spirent Communications (SPT) 74.50p +0.34%Consort Medical (CSRT) 925.00p +0.33%Dialight (DIA) 628.00p +0.16% FTSE TechMARK - FallersRM (RM.) 165.00p -4.90%Oxford Biomedica (OXB) 8.55p -4.15%SDL (SDL) 323.00p -2.49%Torotrak (TRK) 6.72p -2.11%XP Power Ltd. (DI) (XPP) 1,598.00p -1.90%Ricardo (RCDO) 894.50p -1.70%Triad Group (TRD) 32.00p -1.54%Innovation Group (TIG) 39.25p -1.26%Gresham Computing (GHT) 109.00p -0.91%IShares Euro Gov Bond 7-10YR UCITS ETF (IEGM) € 201.54 -0.42%