U.K. Stocks Climb, Sending FTSE 100 Index to 13-Year HighSofia Horta e Costa and Sarah Jones
U.K. stocks climbed to a 13-year high as mining companies and retailers rallied and as Federal Reserve Bank of St. Louis President James Bullard said the U.S. central bank should continue its bond-buying program.
Antofagasta Plc and Glencore Xstrata Plc both advanced more than 3 percent, leading a gauge of metal producers higher. Burberry Group Plc and Marks & Spencer Group Plc gained at least 5 percent after the retailers reported earnings that topped analyst estimates. Carnival Corp. dropped 5.9 percent after the world’s largest cruise operator cut its profit forecast.
The FTSE 100 rose 48.24 points, or 0.7 percent, to 6,803.87 at the close in London, its highest level since Dec. 30, 1999. The gauge has gained 15 percent so far this year, boosted by central-bank stimulus. The broader FTSE All-Share Index also added 0.7 percent today for its eighth straight record, while Ireland’s ISEQ Index fell less than 0.1 percent today.
“It’s a sweet spot for equity markets because monetary policy is still very easy and is set to remain so,” said Thomas Moore, who manages about 150 million pounds ($228 million) as investment director at Standard Life Investments Ltd in Edinburgh. “I don’t see tapering as a threat, I see it as just passing the baton from monetary policy to real economic recovery. Signs of economic recovery are still tentative.”
Bullard, speaking in Frankfurt as European equity markets closed, said the Fed should continue its bond purchases because markets indicate they are improving financial conditions. The program can be adjusted based on how the economy changes, said Bullard, who votes on the policy-setting Federal Open Market Committee this year.
Federal Reserve Chairman Ben S. Bernanke will testify on the outlook for the U.S. economy before the Joint Economic Committee of Congress tomorrow. The Federal Open Market Committee will also release the minutes of its April 30-May 1 meeting. Policy makers said after their last meeting that they will keep buying $85 billion of bonds every month, while standing ready to raise or lower purchases as conditions evolve.
The Bank of England will release tomorrow minutes showing how officials voted at its May 9 policy meeting. The nine-member Monetary Policy Committee kept the target for asset purchases unchanged at 375 billion pounds and its key interest rate at a record low of 0.5 percent.
The volume of shares changing hands in companies on the FTSE 100 was 8.8 percent greater than the average of the past 30 days, according to data compiled by Bloomberg.
A gauge of London-listed mining stocks gained 3.2 percent, its sharpest increase since May 3, as copper advanced for a fourth day. Antofagasta added 4.1 percent to 964 pence, Glencore Xstrata rose 3.3 percent to 346 pence and Anglo American Plc climbed 4.4 percent to 1,621.5 pence.
Burberry advanced 5.3 percent to 1,541 pence, its highest price in a year, after the U.K.’s largest luxury-goods maker reported a 14 percent increase in adjusted full year pretax profit to 427.8 million pounds. That beat the 417.5 million-pound median estimate in a Bloomberg News survey.
The retailer also announced a dividend of 29 pence a share, higher than the 27.8 pence average projection.
Marks and Spencer rallied 6.2 percent to 467.9 pence, its highest price since January 2008. The U.K.’s largest clothing retailer reported a 5.8 percent decline in so-called underlying profit before tax to 665.2 million pounds. That still beat the 663.3 million-pound estimate of analysts surveyed by Bloomberg.
Homeserve Plc rallied 10 percent to 250.2 pence, its biggest increase in six months, after the the repair-service provider said it’s confident it will return to “modest growth” in 2015 and set aside 6 million pounds for costs related to an investigation from the Financial Conduct Authority. Panmure Gordon & Co. upgraded the shares to hold, saying the FCA provision removed a major uncertainty for the company.
Carnival dropped 5.9 percent to 2,267 pence in London, the biggest slide in five months, after the company lowered its earnings forecast. Full-year profit will be $1.45 to $1.65 a share, down from a previous forecast of $1.80 to $2.10. Carnival said that lower ticket prices will hurt margins after a series of incidents at sea prompted the company to cut fares to fill cabins.
Bwin.Party Digital Entertainment Plc lost 2.9 percent to 139.2 pence after the online-betting company posted a 17 percent drop in first-quarter revenue to 180 million euros ($232 million).