U.K. Stocks Rise as ECB, Fed Signal Continued SupportNamitha Jagadeesh and Tom Stoukas
U.K. stocks rose, with the benchmark index completing its ninth monthly gain, as European Central Bank President Mario Draghi and Federal Reserve Chairman Ben S. Bernanke signaled they will continue to support their respective economies.
International Consolidated Airlines Group SA jumped to a 19-month high as the parent of British Airways reported a narrower loss than analysts had predicted. National Express Group Plc posted the biggest gain on the region’s benchmark Stoxx Europe 600 Index after posting better-than-estimated profit. Royal Bank of Scotland Group Plc slid the most in eight months after reporting a wider loss.
The FTSE 100 Index advanced 34.93 points, or 0.6 percent, to 6,360.81 at the close of trading in London. The gauge rallied 1.3 percent in February, for its longest streak of monthly gains since May 1997. The broader FTSE All-Share Index also rose 0.6 percent today, while Ireland’s ISEQ Index added 0.9 percent.
“There seems to be a positive tone in the markets today,” said Espen Furnes, who helps oversee $75 billion as fund manager at Storebrand Asset Management in Oslo. “The markets are just not that concerned about the consequences of the U.S. budget cuts this time around. And no news from the ECB and Fed is good news as it means the current stimulus will continue for now.”
Draghi indicated the ECB won’t tighten monetary policy any time soon. While the ECB’s balance sheet may shrink as confidence returns to financial markets and banks repay emergency loans, policy makers are far from considering an exit from stimulus, Draghi said at an event in Munich late yesterday.
In the U.S., Bernanke discussed the possibility of altering the Fed’s exit strategy by delaying asset sales. The central bank can hold bonds on its $3.1 trillion balance sheet to maturity, he said.
“The one thing we could do differently” is “hold some of the securities a little longer,” Bernanke said in response to questions from members of the House Financial Services Committee. “We could even let them just run off.”
In Japan, Prime Minister Shinzo Abe nominated Asian Development Bank President Haruhiko Kuroda to head the Bank of Japan. Kuroda advocated an inflation target more than a decade before the central bank adopted one in January, and said this month that additional easing can be justified for 2013.
IAG rallied 7.9 percent to 239.2 pence after posting an adjusted operating loss of 23 million euros ($30 million) for 2012, compared with the 88 million-euro loss predicted by analysts in a Bloomberg survey.
National Express, the U.K. coach and train operator, surged 13 percent to 220 pence after reporting 2012 pretax profit of 164 million pounds ($249 million), beating analysts’ estimates of 154 million pounds.
ITV Plc advanced 4.4 percent to 124.2 pence. The owner of the U.K.’s biggest commercial TV station plans to pay a special dividend for a total amount of 156 million pounds after profit rose 8.1 percent last year.
Reed Elsevier Plc added 1.4 percent to 709 pence after the owner of the LexisNexis legal database said it will buy back a further 300 million pounds ($456 million) this year. The company bought 250 million pounds of shares last year, and has deployed another 100 million pounds since the beginning of 2013.
Howden Joinery Group Plc advanced 12 percent to 214 pence, its highest price since at least 1992. The U.K. kitchen builder posted full-year pretax profit of 112.1 million pounds, beating analysts’ forecast for 109.4 million pounds.
RBS lost 6.6 percent to 323.9 pence after Britain’s biggest taxpayer-owned lender said its 2012 net loss widened to 5.97 billion pounds from 2 billion pounds a year earlier. Analysts on average had projected a loss of 5.1 billion pounds.
Kazakhmys Plc plunged 8.6 percent to 619 pence for the biggest drop on the FTSE 100 as it said profit fell 31 percent last year. The copper producer may announce a writedown of $2 billion on the value of its 26 percent stake in Eurasian Natural Resources Corp. when it reports results March 26, Liberum Capital said in a note today.