London open: Stocks advance as BoJ introduces negative interest rates

UK stocks advanced on Friday as Bank of Japan unexpectedly decided to introduce a negative interest rate for some deposits that it holds for the nation’s commercial banks.

The BoJ said on Friday that a negative interest of -0.1% would only apply to new commercial bank current account deposits. It means lenders will have to pay an interest charge to deposit cash with the BoJ. The central bank said the rate could be extended further into negative territory in future.

Stimulus measures, low interest rates and the government of Shinzo Abe’s 'Abenomics' recovery strategy have so far failed to push inflation towards the BoJ’s 2% target.

“After a shaky end to Thursday the markets have surged into life this Friday morning following the decision by the Bank of Japan to implement negative interest rates,” said Connor Campbel, financial analyst at Spreadex.

Markets were also given a boost by another jump in oil prices on hopes that Russia and OPEC would cooperate on production cuts. Brent crude rose 1.5% to $34.44 per barrel and West Texas Intermediate increased 1.4% to $33.72 per barrel.

In economic data, GfK’s consumer confidence survey showed an unexpected improvement in January. The sentiment index rose to 4 this month from 2 in December, beating estimates of 1.

“UK consumers remain resiliently bullish this month with no sign of the January Blues denting their view on the state of their personal finances for both the past year and also for the rest of 2016,” said Joe Staton, head of market dynamics at GfK.

US gross domestic product data at 1330 GMT is forecast to show an annualised 0.8% increase in the last three months of the year, down from 2% growth in the third quarter.

“Despite an increase in payroll employment and total hours worked in the fourth quarter, it appears that GDP growth slowed as net exports fell and businesses cut back on inventory accumulation,” according to HSBC analysts.

In company news, Sky gained after reporting strong revenue growth for the first half of the year and announcing that James Murdoch will return as chairman.

AG Barr edged higher after the maker of Irn-Bru said it expected to deliver fourth quarter revenue growth in excess of 2.5%, which would be lapping the 5% growth seen in the corresponding period a year prior.

British Land jumped after Quadrature Capital signed a contract for Level 33 of the the company’s Leadenhall Building - colloquially known as the Cheese Grater.

Rank Group rallied after reporting a 5% increase in first half revenue on a like-for-like basis to £370.1m, with operating profit before exceptional items up 11% to £46.1m.

Market Movers

FTSE 100 (UKX) 5,982.96 0.86%
FTSE 250 (MCX) 16,259.18 0.39%
techMARK (TASX) 3,111.66 0.45%

FTSE 100 - Risers

Anglo American (AAL) 284.40p 3.08%
Old Mutual (OML) 165.30p 2.42%
HSBC Holdings (HSBA) 487.55p 2.07%
Imperial Tobacco Group (IMT) 3,727.00p 2.00%
DCC (DCC) 5,375.00p 1.99%
Glencore (GLEN) 92.23p 1.97%
Aberdeen Asset Management (ADN) 241.60p 1.94%
Prudential (PRU) 1,345.00p 1.82%
Barclays (BARC) 181.45p 1.71%
Experian (EXPN) 1,172.00p 1.56%

FTSE 100 - Fallers

Carnival (CCL) 3,333.00p -1.51%
International Consolidated Airlines Group SA (CDI) (IAG) 521.50p -0.76%
Fresnillo (FRES) 704.00p -0.71%
Randgold Resources Ltd. (RRS) 4,816.00p -0.35%
TUI AG Reg Shs (DI) (TUI) 1,169.00p -0.34%
Antofagasta (ANTO) 382.70p -0.34%
SABMiller (SAB) 4,158.50p -0.28%
Mondi (MNDI) 1,122.00p -0.18%
Capita (CPI) 1,137.00p -0.18%
GlaxoSmithKline (GSK) 1,412.50p -0.14%

FTSE 250 - Risers

Tullett Prebon (TLPR) 340.90p 8.19%
Smith (DS) (SMDS) 365.00p 6.38%
Dairy Crest Group (DCG) 638.00p 3.99%
ICAP (IAP) 482.60p 3.87%
Jimmy Choo (CHOO) 134.90p 3.77%
Tullow Oil (TLW) 169.40p 3.61%
Vedanta Resources (VED) 242.70p 2.93%
Investec (INVP) 437.70p 2.75%
DFS Furniture (DFS) 319.90p 2.37%
Fidelity China Special Situations (FCSS) 120.80p 1.94%

FTSE 250 - Fallers

Home Retail Group (HOME) 138.40p -2.88%
FirstGroup (FGP) 87.50p -2.83%
Dunelm Group (DNLM) 872.00p -1.97%
Allied Minds (ALM) 278.60p -1.90%
Go-Ahead Group (GOG) 2,341.00p -1.84%
Entertainment One Limited (ETO) 150.20p -1.83%
Just Eat (JE.) 364.30p -1.78%
CLS Holdings (CLI) 1,606.00p -1.77%
Zoopla Property Group (WI) (ZPLA) 211.10p -1.68%
Acacia Mining (ACA) 192.50p -1.48%