London open: Stocks gain after Fed raises interest rates

UK equities gained on Thursday after the Federal Reserve raised interest rates and chair Janet Yellen assured the market that further increases would be gradual.

The FTSE 100 rose 1.58% to 6,157 points at 0903 GMT.

The Fed hiked interest rates for the first time in nearly a decade on Wednesday evening by 25 basis points to 0.50%, as expected by analysts.

Speaking at a press conference after the policy announcement Yellen said the economy would continue to strengthen but it still has room for improvement. She said further action will depend on economic growth but any future interest rate hikes would be steady.

Yellen said if the Fed had continued to delay a rate rise it could have been forced to implement a more aggressive increase if economic growth soared and inflation suddenly jumped towards the 2% target.

“Overall, we believe Fed and Chair Janet Yellen succeeded in being neither too hawkish nor too dovish, which is reflected in the muted market reaction,” according to Dankse Bank analysts.

“We stick to our view that the Fed will hike three times in 2016 and four in 2017.”

On Thursday’s agenda, the Office for National Statistics releases its report on UK retail sales at 0930 GMT. Analysts predict a 2.3% rise in November compared to a year ago, slowing from the previous month’s 3% gain.

“This year, we think growth will not be as strong, with less intense discounting and reports of lower footfall than last year,” according to HSBC analysts.

“Of course online shopping could be strong but non-store retailing accounts for just 7% of the retail sales basket."

In Germany, business confidence fell unexpectedly in December, according to the IFO. The business climate index fell to 108.7 from 109 in November.

Still to come, the US will see its weekly jobless claims data. Economists predict an increase to 274,000 in the week to 12 December from 282,000 the previous week.

On the company front, Astrazeneca rallied as it announced it would acquire a 55% stake in Acerta Pharma over its oncology treatment – a deal valued at $4bn (£2.7bn).

The London Stock Exchange Group was a high riser after saying equity capital raisings were down 2% to £40bn in 2015 due to “more challenging market conditions”. New issues were down to 161 new issues from 193 last year

Ted Baker advanced as it said it was buying its currently rented London headquarters for £58.25m.

Oil stocks were under pressure, including Royal Dutch Shell and Premier Oil, as Brent crude dropped 1.13% to $36.97 per barrel and West Texas Intermediate fell 1.16% to $35.11 per barrel at 0859 GMT.

Miners were also under the cosh, including Fresnillo, Anglo American and Rio Tinto, as metal prices declined. Gold, silver and copper were down 0.96%, 1.46% and 1.47%, respectively.

Market Movers

FTSE 100 (UKX) 6,156.15 1.57%
FTSE 250 (MCX) 17,256.41 1.06%
techMARK (TASX) 3,192.53 1.48%

FTSE 100 - Risers

Old Mutual (OML) 176.80p 7.15%
Sainsbury (J) (SBRY) 258.40p 4.11%
Intu Properties (INTU) 325.50p 4.03%
Mondi (MNDI) 1,359.00p 3.82%
St James's Place (STJ) 1,004.00p 3.29%
Standard Chartered (STAN) 529.40p 3.26%
Capita (CPI) 1,209.00p 3.07%
Morrison (Wm) Supermarkets (MRW) 151.70p 3.06%
International Consolidated Airlines Group SA (CDI) (IAG) 602.50p 2.99%
Ashtead Group (AHT) 1,152.00p 2.86%

FTSE 100 - Fallers

Berkeley Group Holdings (The) (BKG) 3,641.00p -3.09%
Fresnillo (FRES) 664.50p -1.34%
Anglo American (AAL) 276.85p -0.49%
Rio Tinto (RIO) 1,895.50p -0.21%
Next (NXT) 7,430.00p -0.20%
Randgold Resources Ltd. (RRS) 4,113.00p -0.17%
Royal Dutch Shell 'B' (RDSB) 1,475.00p 0.00%
Smiths Group (SMIN) 940.00p 0.27%
Coca-Cola HBC AG (CDI) (CCH) 1,491.00p 0.27%
Sage Group (SGE) 589.00p 0.34%

FTSE 250 - Risers

Investec (INVP) 486.20p 7.33%
Jimmy Choo (CHOO) 121.50p 4.74%
Entertainment One Limited (ETO) 178.60p 4.63%
Man Group (EMG) 166.50p 3.74%
Henderson Group (HGG) 301.50p 3.22%
Capital & Counties Properties (CAPC) 448.50p 3.17%
Temple Bar Inv Trust (TMPL) 1,055.00p 3.03%
Evraz (EVR) 64.00p 2.89%
OneSavings Bank (OSB) 370.00p 2.86%
Ocado Group (OCDO) 341.10p 2.77%

FTSE 250 - Fallers

Elementis (ELM) 217.10p -8.28%
Marston's (MARS) 165.00p -2.71%
Halfords Group (HFD) 330.60p -2.10%
Premier Oil (PMO) 48.22p -1.85%
Acacia Mining (ACA) 164.50p -1.56%
Euromoney Institutional Investor (ERM) 935.50p -1.53%
Riverstone Energy Limited (RSE) 795.00p -1.30%
Pets at Home Group (PETS) 277.90p -1.07%
Zoopla Property Group (WI) (ZPLA) 231.80p -0.94%
Petrofac Ltd. (PFC) 798.00p -0.93%