London close: FTSE rises as traders count down to Fed decision

The FTSE ended Wednesday’s session in positive territory as investors weighed UK employment data and awaited the Federal Reserve’s interest rate decision.

The UK unemployment rate fell to 5.2% in the three months to October from 5.3% the previous quarter, according to the Office for National Statistics.

Employment rose by 207,000 to 31.3m during the quarter, beating analysts' estimates of 150,000 and marking a pick-up on the 177,000 recorded in the prior three months.

However, average weekly earnings increased 2.4% compared to the same quarter a year ago, missing expectations for a 2.5% rise and following the previous quarter's 3% gain.

"The latest UK figures show a slowdown in wage growth, adding to evidence that there is no need for the Bank of England's Monetary Policy Committee to follow the Federal Reserve in raising interest rates just yet," said Scott Bowman, UK economist at Capital Economics.

Jobless claims rose 3,900 in November, worse than the 800 claims predicted and October's 200. The claimant count rate last month rose 2.3%, as anticipated and the same as October's growth.

Investors are now turning their focus to the Federal Reserve’s policy decision at 1900 GMT and chair Janet Yellen’s press conference at 1930 GMT. The Fed is widely expected to raise interest rates for the first time in nearly a decade by 25 basis points.

“Any questions surrounding tonight’s announcement are now more focused on how fast the Fed will raise rates, rather than if they will raise rates at all, with analysts arguably looking for a ‘dovish hike’ and plenty of reassurance that Yellen and co will be taking things slowly,” said Connor Campbell, financial analyst at Spreadex.

“Of course the central bank still has the capacity to disappoint, though there seems to be more certainty from analysts and investors this time around when compared to the last feasible moment for lift-off back in September.”

Ahead of the big event, the Federal Reserve revealed US industrial production declined 0.6% in November, worse than forecasts for a 0.2% drop and the previous month’s 0.3% decrease.

Markit's US manufacturing purchasing managers' index fell to 51.3 in December from 52.8 in November, missing projections of 52.6. A reading above 50 signals expansion while a level below that indicates a contraction.

US housing starts rebounded in November from a seven-month low, rising 10.5% to 1.17m units, the Commerce Department said. Analysts had expected 1.13m units. October's starts were largely unchanged at a 1.06m.

In the Eurozone, the final estimate of inflation was unexpectedly revised to a 0.2% year-on-year increase in November from an earlier estimate of 0.1%.

Markit's Eurozone service PMI fell to 53.9 this month from 54.2 in November, missing forecasts of 54.

Eurozone manufacturing PMI, however, rose to 53.1 in December from 52.8 in November. Analysts had expected no change in the reading.

In China, the People’s Bank of China said economic growth in the world’s second-largest economy is expected to slow to 6.8% in 2016. The PBoC attributed the slight slowdown to industrial overcapacity, rising bad loans from banks and sluggish demand for the nation's goods.

On the company front, Pearson was a high riser after Exane BNP Paribas upgraded the stock to ‘outperform’ from ‘neutral’.

Property groups rallied, including Berkeley Group, Land Securities and British Land, after Moody’s said London’s office real estate market will see rapid growth over the next 12-18 months.

Rolls-Royce advanced after splitting out its divisions and reshuffling its senior management team, in what it said is the first step in a “wide-ranging” restructuring programme.

Dixons Carphone jumped as the company reported first half underlying pre-tax profit rose 23% to £121m, beating analysts’ forecasts of £111m.

SuperGroup surged after reporting a 54.4% jump in pre-tax profits in the first half to £19.3m.

Sport Direct International's shares dropped on the fallout over its staff’s pay and working conditions. An investigation in The Guardian last week claimed thousands of Sports Direct workers were receiving effective hourly rates of pay below the minimum wage, as well as being subject to daily searches, being harangued via tannoy to hit targets, and a ‘six strikes and you’re out’ regime.

N Brown Group slumped as N+1 Singer trimmed its sales forecasts for the full year after an unseasonally warm start to the Autumn/Winter trading period.

Market Movers

FTSE 100 (UKX) 6,061.19 0.72%
FTSE 250 (MCX) 17,075.94 0.45%
techMARK (TASX) 3,146.11 0.43%

FTSE 100 - Risers

Standard Chartered (STAN) 512.70p 6.37%
Pearson (PSON) 743.50p 5.16%
Rolls-Royce Holdings (RR.) 566.50p 4.91%
Shire Plc (SHP) 4,347.00p 3.95%
Anglo American (AAL) 278.50p 2.73%
G4S (GFS) 219.10p 2.43%
Glencore (GLEN) 84.35p 2.40%
Randgold Resources Ltd. (RRS) 4,120.00p 2.39%
Capita (CPI) 1,173.00p 2.36%
BHP Billiton (BLT) 702.50p 2.27%

FTSE 100 - Fallers

ARM Holdings (ARM) 1,021.00p -2.95%
Sports Direct International (SPD) 570.50p -1.55%
Mondi (MNDI) 1,309.00p -1.28%
BG Group (BG.) 945.70p -1.08%
Persimmon (PSN) 1,952.00p -0.91%
Tesco (TSCO) 148.00p -0.87%
Next (NXT) 7,445.00p -0.80%
Old Mutual (OML) 165.00p -0.72%
Marks & Spencer Group (MKS) 460.20p -0.52%
Sainsbury (J) (SBRY) 248.20p -0.44%

FTSE 250 - Risers

Supergroup (SGP) 1,678.00p 10.69%
Drax Group (DRX) 226.90p 7.64%
Bwin.party Digital Entertainment (BPTY) 124.20p 6.43%
Acacia Mining (ACA) 167.10p 5.83%
OneSavings Bank (OSB) 359.70p 5.79%
AA (AA.) 300.00p 5.04%
CLS Holdings (CLI) 1,863.00p 4.60%
Shawbrook Group (SHAW) 344.00p 4.24%
Bodycote (BOY) 547.00p 4.19%
Aldermore Group (ALD) 214.00p 4.14%

FTSE 250 - Fallers

Brown (N.) Group (BWNG) 301.70p -6.04%
Nostrum Oil & Gas (NOG) 361.50p -4.37%
Tullett Prebon (TLPR) 342.90p -4.16%
Vedanta Resources (VED) 277.20p -3.92%
Kaz Minerals (KAZ) 89.20p -3.83%
Debenhams (DEB) 73.25p -3.55%
Home Retail Group (HOME) 93.70p -3.05%
Indivior (INDV) 185.70p -2.77%
Dignity (DTY) 2,386.00p -2.45%
Allied Minds (ALM) 404.90p -2.29%