U.K. stocks closed little changed as Britain’s unemployment fell, signaling a rebound in the economy and fueling speculation that the Bank of England may raise interest rates earlier than projected.
HSBC Holdings Plc, which makes up 7.7 percent of the benchmark FTSE 100 Index, dropped 1 percent after JPMorgan Chase & Co. downgraded the stock. African Minerals Ltd. slumped to a four-year low after cutting its full-year export forecast. ARM Holdings Plc, which designs chips for Apple Inc.’s iPhone, jumped the most in more than four months on bets it will benefit from the introduction of new models of the device.
The FTSE 100 added 4.4 points, less than 0.1 percent, to 6,588.43 at the close, after yesterday reaching its highest level since Aug. 14. The measure has declined 3.7 percent from a 13-year high on May 22 amid concern the Federal Reserve may begin reducing its asset purchases this year. The broader FTSE All-Share Index gained less than 0.1 percent today, while Ireland’s ISEQ Index dropped 0.3 percent.
“If the U.K. economy is indeed recovering, it doesn’t really matter what the Bank of England says about short rates because they’re going to go up at some stage,” Kevin Gardiner, the head of investment strategy for Barclays Plc’s wealth management unit, told Anna Edwards on Bloomberg Television. “What the BOE needs to be aware of is that whatever they say about interest rates is of secondary importance to what the economy is doing.”
The number of shares changing hands in FTSE 100-listed shares was 8.5 percent greater than the average of the past 30 days, data compiled by Bloomberg showed.
A report today showed the U.K. unemployment rate fell to a 7.7 percent rate in the three months through July, according to figures from the Office for National Statistics. That was the lowest level in eight months and lower than the median forecast of 7.8 percent. Jobless claims fell 32,600 in August, more than economists had forecast.
Bank of England officials linked policy to unemployment last month, saying they wouldn’t raise their key interest rate until the jobless rate falls to 7 percent. Governor Mark Carney forecast that the rate will remain above the 7 percent level until at least the third quarter of 2016.
In the U.S., President Barack Obama asked Congress to postpone a vote on military action against Syria and said he will pursue a proposal by Russia to get the Middle Eastern country to give up chemical weapons. Obama had considered strikes against Syrian President Bashar al-Assad’s regime following a chemical attack on Aug. 21 that the U.S. says killed more than 1,400 people.
HSBC lost 1 percent to 699 pence, for the biggest drag on the FTSE 100. JPMorgan cut its rating on the stock to neutral from overweight, citing its exposure to emerging-market economies. HSBC has increased 7.9 percent so far this year.
African Minerals slumped 15 percent to 167 pence, its lowest price since May 2009, after saying exports may fall to as low as 11 million metric tons in 2013, compared with a previous forecast for 13 million tons to 15 million tons because of maintenance and operational problems.
Kingfisher Plc, owner of the B&Q home-improvement stores, slipped 2.7 percent to 408.5 pence after closing at its highest price in 13 years yesterday. Adjusted pretax profit in the 26 weeks ended Aug. 3 fell to 365 million pounds ($577 million), Kingfisher said, compared with the 367 million-pound median projections by analysts in a Bloomberg survey.
Barratt Developments lost 4.6 percent to 317.1 pence, halting a four-day winning streak even after saying profit jumped 11 percent in the 12 months ended in June. The shares have still rallied 53 percent so far this year.
African Barrick Gold Plc lost 2.2 percent to 170 pence. The gold producer said Chief Operating Officer Marco Zolezzi resigned three weeks after Greg Hawkins quit as chief executive officer.
ARM advanced 4.8 percent to 986.5 pence, its highest price since May 31. ARM will benefit from the new high-end iPhone because it will use ARM’s more advanced technology earlier than expected, Deutsche Bank AG analysts Johannes Schaller and Kai Korschelt wrote in a note. Analysts will probably upgrade their profit projections as ARM charges higher royalty rates for this technology, according to Deutsche Bank.