By Carla Mozee, MarketWatch
Admiral shares hit hard after earnings report; Sage upgraded
U.K. stocks climbed Wednesday, with gains for BHP Billiton PLC
and other miners guiding the market to a third consecutive advance,
while an update from the British labor market came in better than
had been anticipated.
The FTSE 100 moved up 0.7% to close at 7,433.03. The index on
Tuesday rose 0.4%,
(http://www.marketwatch.com/story/uk-stocks-rise-for-2nd-straight-day-ahead-of-key-inflation-data-2017-08-15)
aided by a slide in the pound after a weaker-than-expected reading
on inflation.
U.K. blue-chips rose alongside gains across Europe that pushed
the Stoxx Europe 600 index higher by 0.7%.
Tuesday's session "has been followed by a decisive revival of
bullish sentiment that has seen the FTSE 100 consolidate its hold
above 7,400 and the Dow Jones reclaim the 22,000 level once more,"
IG's chief market analyst Chris Beauchamp wrote.
"It appears the latest crisis in Washington has little impact on
risk appetite, even coming just one day after a fund manager survey
pointed to renewed worries about overvaluation in equities," he
added.
The FTSE 100 last week was a few points away from surpassing its
highest closing level. But it was knocked from the path when
tensions between the U.S. and North Korea over North Korea's
nuclear ambitions flared up.
"Growth plays are in favor again today, as miners soar, helping
the sector to recover yesterday's losses. It might be a quiet
market, but this rally goes on," he said.
Equities on Wednesday held to gains after British wage growth
rose more than expected in June while the unemployment rate fell to
4.4%
(http://www.marketwatch.com/story/uk-jobless-rate-hits-lowest-since-1975-2017-08-16),
the lowest since 1975.
"For the average consumer, this is only good news as purchasing
power takes a step in the right direction which with Brexit
headwinds is a nice, albeit temporary, relief for U.K. economics,"
wrote Alex Lydall, head of dealing at Foenix Partners.
Read:The pound is 'extremely undervalued' right now, according
to UBS
(http://www.marketwatch.com/story/the-pound-is-extremely-undervalued-right-now-according-to-ubs-2017-08-16)
Miners: Mining shares were among the best performers on
Wednesday, keying off a jump in prices for most metals. Copper
futures were up nearly 3% and zinc futures surpassed $3,000 a
metric ton for the first time since 2007.
"Market participants appear to have regained their risk
appetite, with the result that metals prices are picking up again
after a brief time-out," said commodities analyst at Commerzbank in
a note.
Shares of Glencore PLC (GLEN.LN) , whose portfolio of metals
include zinc and copper, zoomed up 4.2%, and Anglo American PLC
(AAL.LN) climbed 3.6%. Iron-ore producer Rio Tinto PLC (RIO) (RIO)
(RIO) gained 2.4%.
BHP Billiton (BLT.LN) (BHP.AU) (BHP.AU) rose 1.9% after activist
investor Elliott Management Corp. said it has raised its holding in
the mining heavyweight
(http://www.marketwatch.com/story/elliott-management-increases-stake-in-bhp-billiton-2017-08-15)
to 5% of BHP's London-listed shares. Elliott also signaled it backs
the coming chairman to act on sweeping changes it's been
seeking.
Data: The Office for National Statistics said average weekly
earnings rose 2.1%, both excluding and including bonuses. Analysts
polled by FactSet had expected wage growth of 1.9% excluding
bonuses, and of 1.8% including bonuses.
The pound jumped to an intraday high of $1.2903 from $1.2854
just before the June jobs report was released.
"Those hoping for an interest rate hike from the Bank of England
are likely to be waiting a while longer, however, as wage growth is
still subdued compared to historical standards. Rates are likely to
stay put for 2017, and possibly next year, too," said Jake Trask,
FX research director at OFX.
Sterling eventually pared its gain to $1.2857, not far off from
late Tuesday's level at $1.2869. The U.K.'s benchmark interest rate
stands at a record low 0.25%.
Meanwhile, investors will be looking for signals that the
Federal Reserve remains on course to raise interest rates again
this year when minutes from that central bank's July meeting are
released at 7 p.m. London time, or 2 p.m. Eastern time.
Stock movers: Elsewhere in equity trade, Admiral Group PLC
(ADM.LN) sank 6% as the insurer's first-half profit increased but
its U.K. insurance business continued to be weighed by a change in
the way personal-injury compensation is calculated
(http://www.marketwatch.com/story/admiral-profit-rises-but-claims-calculation-bites-2017-08-16).
"Most of the adverse impact from the increase in the costs of
large injury claims, resulting from the change in the Ogden
discount rate, was captured in our 2016 second half result.
However, some extra costs carry into 2017," Admiral said in its
earnings report.
Sage Group PLC (SGE.LN) rose 3.1% after UBS upgraded the
accounting software maker to a neutral rating from sell.
(END) Dow Jones Newswires
August 16, 2017 12:33 ET (16:33 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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