London close: Stocks rise ahead of FOMC minutes, Next jumps
London stocks edged higher on Wednesday, as a disappointing reading on the UK construction sector was offset by a solid performance for retailers after Next lifted its guidance and ahead of the release of the minutes of the US central bank's last policy meeting.
The FTSE 100 finished 0.30% or 23.01 points higher at 7,671.11, while the pound was off by 0.24% versus the euro at 1.1242 and 0.54% lower against the greenback at 1.3523.
UK construction firms reported a worse December than the market had been expecting and expectations for the year ahead were the worst for four and a half years. Growth in the last month of the year came as housebuilders slightly slowed their pace of growth and commercial building continued to decline.
The Markit/CIPS construction purchasing managers' index fell to 52.2 in December from 53.1 in November, below the consensus forecast of 53.0. A PMI reading above 50 indicates growth in output.
While residential building expanded for the sixteenth consecutive month, responses to the survey indicated a slight moderation from the preceding month. Commercial construction extended the slump seen since July, while civil construction was reported to have stabilised after a most of the second half of the year negative territory.
Economists at Pantheon Macroeconomics said the construction sector ended 2017 on a weak note, probably depressed by the heavy snowfall in December, with the average level of the PMI in the fourth quarter of 52.0 suggesting construction output held steady, following two consecutive quarter-on-quarter declines.
With the UK construction figures out of the way, investors will turn their attention to the minutes from the Federal Open Market Committee’s 12-13 December meeting as they look for clues on the central bank’s interest rate path following three hikes last year.
Rabobank said its Fed watcher Philip Marey continues to argue that core inflation will continue to undershoot the Fed's 2% target.#
"Therefore, he expects only two hikes this year - one in June and another in December - instead of the three hikes that are implied by the dot plot."
In corporate news, Next provided some cheer, with its shares racking up impressive gains as the retailer nudged up its full year profit target thanks to a better online sales performance in the run up to Christmas, and said it expects increased sales but slightly lower profits in the coming year. Fellow retailers Marks & Spencer rose along with Primark owner Associated British Foods, N Brown, Supergroup, Sports Direct and JD Sports.
Electrocomponents gained after saying it expects changes to US tax law to trigger a one-off credit this year followed by a reduced overall tax rate in the longer run.
Budget airline Ryanair flew higher as it reported a 3% jump in traffic for December and said it has applied for a UK air operator licence so it can continue to fly from Britain in the event of a hard Brexit.
CLS Holdings was up as it unconditionally exchanged contracts to sell three properties in Peterborough in the UK and Hamburg in Germany for £12.4m.
FTSE 250 residential landlord Grainger was steady after it exchanged contracts with Abode Hallam Limited and agreed to forward fund and acquire a private rented sector (PRS), build to rent development, Eccy Village, in Sheffield, for around £32m.
Indivior got a fairly flat reaction after saying it is joining up with Switzerland's Addex Pharma to support the development of treatments for drug addiction that target neurotramsitter systems.
Wizz Air was in the red as it posted a 20% jump in passenger numbers in December, while Babcock International slipped despite signing a five-year agreement worth about £115m to maintain frigates for the Australian navy.
Carillion slumped as it emerged the outsourcer and construction group is being investigated by the Financial Conduct Authority over the "timeliness and content" of updates made by the company in the run up to its profit warning on 10 July last year.
In broker note action, IG Group was up after Barclays lifted its price target on the stock and reiterated its ‘overweight’ stance, while Experian and Bunzl were boosted by upgrades to ‘outperform’ at Credit Suisse.
Serco, Hays and Pagegroup were all lower following downgrades by Credit Suisse.
FTSE 100 - Risers
Next (NXT) 4,800.00p 6.67%
Just Eat (JE.) 810.40p 4.30%
Experian (EXPN) 1,635.50p 2.25%
Associated British Foods (ABF) 2,837.00p 2.09%
easyJet (EZJ) 1,531.50p 2.03%
NMC Health (NMC) 2,926.00p 2.02%
Morrison (Wm) Supermarkets (MRW) 223.31p 1.97%
Ashtead Group (AHT) 2,004.00p 1.93%
ITV (ITV) 170.90p 1.85%
Scottish Mortgage Inv Trust (SMT) 456.40p 1.78%
FTSE 100 - Fallers
Antofagasta (ANTO) 975.20p -2.58%
WPP (WPP) 1,303.00p -2.51%
Fresnillo (FRES) 1,400.00p -2.44%
Randgold Resources Ltd. (RRS) 7,294.00p -2.04%
Mediclinic International (MDC) 638.00p -1.69%
Paddy Power Betfair (PPB) 8,770.00p -1.46%
United Utilities Group (UU.) 805.20p -1.40%
Hargreaves Lansdown (HL.) 1,801.50p -1.18%
Compass Group (CPG) 1,562.50p -1.11%
Admiral Group (ADM) 1,927.00p -1.10%
FTSE 250 - Risers
Ocado Group (OCDO) 423.00p 7.77%
IG Group Holdings (IGG) 785.50p 7.75%
Brown (N.) Group (BWNG) 286.20p 7.35%
Supergroup (SGP) 2,076.00p 4.85%
Tullow Oil (TLW) 213.50p 4.15%
Cairn Energy (CNE) 219.00p 4.09%
Pershing Square Holdings Ltd NPV (PSH) 1,058.00p 3.73%
Sirius Minerals (SXX) 24.06p 3.44%
Softcat (SCT) 530.00p 3.31%
JD Sports Fashion (JD.) 352.30p 3.10%
FTSE 250 - Fallers
Inmarsat (ISAT) 465.50p -5.35%
AA (AA.) 167.20p -5.30%
Pagegroup (PAGE) 442.80p -4.45%
Equiniti Group (EQN) 274.50p -4.36%
Sanne Group (SNN) 790.00p -3.07%
Capita (CPI) 398.70p -2.76%
Hays (HAS) 178.60p -2.56%
Dairy Crest Group (DCG) 565.50p -2.33%
Kaz Minerals (KAZ) 873.60p -2.22%
Merlin Entertainments (MERL) 349.00p -2.05%