London close: Stocks close higher as investors weigh earnings, await Fed decision

UK stocks closed higher on Tuesday as traders weighed a deluge of earnings and awaited the Federal Reserve’s interest rate decision.

Standard Chartered was a standout riser as it reported an improvement in impairment losses on bad loans in the first quarter to $471m from $476m in the same period last year. Investors seemed to overlook a 59% drop in first quarter profit amid depressed commodity prices, volatility in Chinese markets and weak emerging market sentiment.

BP also gained despite posting a pre-tax loss of $865m in the first quarter, compared to a $2.2bn profit in the first quarter of 2015, as it kept its dividend unchanged at 10 cents.

Whitbread rallied after reporting a rise in full year underlying pre-tax profit and revenue, supported by growth at its Premier Inn and Costa brands.

Cobham slumped after the aerospace and defence group proposed a £500m rights issue in the second quarter of the year as it reported a big drop in first-quarter trading profit.

Meanwhile, housebuilders rallied as the pound strengthened against the dollar and as data showed a jump in gross mortgage borrowing in March. Persimmon, Taylor Wimpey and Barratt Developments were among the risers.

The British Banker’s Association said gross mortgage borrowing came to £17.1bn in March, up 64% compared to year ago and 29.5% compared to February. BBA said the rise was driven by the purchase of buy-to-let properties and second homes ahead of higher stamp duty charges on 1 April.

Howard Archer, chief UK and European economist at IHS Global Insight, said he sees the housing market slowing following the introduction of extra stamp duty and due to uncertainty ahead of Britain’s European Union referendum on 23 June.

However, he still sees housing market activity holding up "reasonably well" as buyer interest is supported by high employment and low interest rates.

"Consequently, while house price growth may ease back from current levels, we still expect house prices to rise by around 6% over 2016 – with support coming from a relative shortage of properties as well as decent buyer interest," he said.

In a downbeat note for retail sector, Austin Reed has become the second iconic British name to go into administration this week. The news comes a day after fellow high street retailer BHS announced it was going into administration, putting 11,000 jobs at risk.

In commodities, oil prices rebounded from declines in the previous session as the US dollar weakened. Brent crude rose 2.7% to $45.73 per barrel and West Texas Intermediate climbed 2.9% to $43.94 per barrel at 1657 BST.

In the US, new orders for durable goods rose 0.8% in March to $230.7bn, according to the Commerce Department, missing expectations of a 1.8% increase.

House prices in the US rose a touch less than expected in February, according to the S&P/Case-Shiller National Home Price Index. The S&P/Case-Shiller 20-City Composite was up 5.4% on the year, down from 5.7% the previous month and missing expectations of a 5.5% increase.

US services activity picked up in April, according to a flash estimate by Markit. The purchasing managers’ index rose to 52.1 in April from 51.3 in March, beating forecasts of 52.0. A reading above 50 signals an expansion in the sector while a level below that indicates a contraction.

US consumer confidence fell in April as optimism on the outlook for business conditions and the labour market weakened, according to the Conference Board. The sentiment index fell to 94.2 this month from 96.1 in March, below estimates for a reading of 96.0.

Investors are now looking ahead to the Fed's interest rate decision after the close on Wednesday. The central bank is widely expected to stand pat on interest rates on Wednesday. Market participants will be scrutinising the accompanying statement for any clues on future policy.

Bank of America Merrill Lynch reckons the Fed will likely hike rates again this summer, potentially in June if the global market selloff ahead of the Brexit vote in the UK is limited. Otherwise, it still sees a good case for the next hike in July.

Market Movers

FTSE 100 (UKX) 6,284.52 0.38%
FTSE 250 (MCX) 16,950.02 -0.09%
techMARK (TASX) 3,083.11 -1.07%

FTSE 100 - Risers

Standard Chartered (STAN) 571.70p 9.82%
Paddy Power Betfair (PPB) 8,765.00p 4.66%
BP (BP.) 375.90p 4.32%
Lloyds Banking Group (LLOY) 70.00p 3.57%
Intu Properties (INTU) 305.70p 2.96%
Berkeley Group Holdings (The) (BKG) 3,065.00p 2.89%
Taylor Wimpey (TW.) 184.20p 2.79%
Land Securities Group (LAND) 1,125.00p 2.74%
Whitbread (WTB) 3,969.00p 2.64%
Persimmon (PSN) 1,967.00p 2.50%

FTSE 100 - Fallers

AstraZeneca (AZN) 4,003.00p -1.98%
Glencore (GLEN) 151.95p -1.97%
Inmarsat (ISAT) 928.50p -1.90%
Burberry Group (BRBY) 1,212.00p -1.78%
Anglo American (AAL) 667.20p -1.75%
Shire Plc (SHP) 4,191.00p -1.34%
Relx plc (REL) 1,229.00p -1.29%
Unilever (ULVR) 3,147.50p -1.24%
Kingfisher (KGF) 360.90p -1.23%
BAE Systems (BA.) 484.20p -1.16%

FTSE 250 - Risers

Drax Group (DRX) 323.40p 5.00%
AO World (AO.) 186.30p 4.96%
Entertainment One Limited (ETO) 195.00p 4.84%
Capital & Counties Properties (CAPC) 354.10p 4.12%
Workspace Group (WKP) 847.00p 3.67%
Crest Nicholson Holdings (CRST) 516.00p 3.47%
St. Modwen Properties (SMP) 313.50p 3.29%
Grainger (GRI) 222.70p 3.29%
Millennium & Copthorne Hotels (MLC) 462.30p 3.19%
TalkTalk Telecom Group (TALK) 261.20p 3.12%

FTSE 250 - Fallers

Cobham (COB) 177.60p -17.47%
Aberdeen Asset Management (ADN) 295.00p -4.62%
Centamin (DI) (CEY) 101.20p -4.26%
Paysafe Group (PAYS) 370.00p -4.12%
Greggs (GRG) 1,040.00p -3.17%
Indivior (INDV) 165.60p -3.04%
Brown (N.) Group (BWNG) 262.70p -2.74%
Hikma Pharmaceuticals (HIK) 2,245.00p -2.65%
Weir Group (WEIR) 1,157.00p -2.53%
NMC Health (NMC) 1,055.00p -2.41%