LONDON MARKETS: FTSE 100 Rises, On Track For Fresh 2016 Closing High
July 27 2016 - 10:09AM
Dow Jones News
By Carla Mozee and Victor Reklaitis, MarketWatch
U.K. GDP expands in runup to Brexit vote
U.K. stocks headed for a second day of gains Wednesday, as
investors weighed corporate earnings reports and the prospects for
central bank action.
Equities held to gains after U.K. gross domestic product for the
second quarter outstripped expectations. The preliminary reading
was in particular focus as it provided a snapshot of the economic
situation in the runup to and just after the Brexit
(https://brexit.efinancialnews.com/) referendum on June 23.
The FTSE 100 was up 0.8% at 6,776.32, putting the blue-chip
index on track for its highest close in 2016. The gauge on Tuesday
closed 0.2%
(http://www.marketwatch.com/story/ftse-100-edges-higher-as-sabmiller-gains-but-oil-major-bp-loses-ground-2016-07-26)
higher.
Trading got underway amid reports that Japanese Prime Minister
Shinzo Abe plans to introduce an economic stimulus plan worth more
than Yen28 trillion yen next week
(http://www.wsj.com/articles/japan-govt-mulling-issuance-of-50-year-debt-sources-1469589748).
And after the close of European trade, the U.S. Federal Reserve is
slated to release its policy decision. Expectations are for the Fed
to hold off on raising interest rates.
The "assessment of the Brexit risks to the U.S. and global
economy will be key to keeping the door open for any rate rise in
2016," said James Ruddiman, director of forex advisory at Audere
Solutions, in a note.
Read:Why the Fed may want to reach for the stock market's punch
bowl
(http://www.marketwatch.com/story/why-the-fed-may-want-to-lurch-for-the-punch-bowl-2016-07-26)
Movers: Earnings reports continued to roll in Wednesday. ITV PLC
and home builder Taylor Wimpey PLC were among the companies whose
shares gained after their results.
ITV shares (ITV.LN) surged 8%, on course for their best session
since November 2012, according to FactSet. First-half net profit
fell to GBP243 million ($319 million) on costs, but revenue rose on
the expansion of its production business
(http://www.marketwatch.com/story/itv-profit-falls-on-costs-as-revenue-jumps-2016-07-27).
ITV's programs include "Downton Abbey" and "The X Factor".
Taylor Wimpey (TW.LN) pushed up 7.8% after the company said it
remains committed to its dividend policy
(http://www.marketwatch.com/story/taylor-wimpey-profit-up-13-backs-dividend-policy-2016-07-27)
and posted a 13% rise in half-year pretax profit.
But decliners included GKN PLC (GKN.LN) as the car and plane
components maker posted flat half-year profit of GBP163 million
pounds
(http://www.marketwatch.com/story/gkn-profit-flattens-out-2016-07-26)($214
million). But revenue rose and GKN raised its dividend. The stock
was down 1.6%.
GDP: The first reading of second-quarter U.K. GDP showed
quarter-over-quarter growth of 0.6%
(U.K.%20economic%20growth%20picked%20up%20pace%20ahead%20of%20Brexit%20referendum).
That was above expectations of 0.4% in a Wall Street Journal survey
of economists, and higher than growth of 0.4% in the first
quarter.
The report's headline figure "masks the contribution from a 2.1%
q/q surge in industrial production, which we see as unlikely to be
sustained," said Chris Hare, economist at Investec, in a note.
The GDP data follow last week's report from Markit showing
contraction in both the manufacturing and services sectors in July
(http://www.marketwatch.com/story/uk-economy-in-dramatic-downturn-after-brexit-vote-data-show-2016-07-22).
Since the Brexit vote, it appears there has been
"near-unanimity" in calls by Bank of England policy makers "for
more stimulus in response to a prospective weakening in the
economy," said Hare. "We see a 25 basis points rate cut at the next
Monetary Policy Meeting meeting ... alongside a package of other
measures."
The Bank of England will meet Aug. 4.
The pound was little changed, buying $1.3127 compared with
$1.3139 late Tuesday in New York.
(END) Dow Jones Newswires
July 27, 2016 09:54 ET (13:54 GMT)
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