Bloomberg News

U.K. Stocks Advance as HSBC and Standard Chartered Shares Rally

June 18, 2013

U.K. stocks climbed, sending the benchmark FTSE 100 (UKX) Index higher for a fourth day, as the Federal Reserve began its two-day meeting on monetary policy.

HSBC Holdings Plc (HSBA), Europe’s largest bank, and Standard Chartered Plc (STAN), both rallied more than 1 percent amid speculation China may cut interest rates to boost growth. Whitbread Plc (WTB) gained 3.6 percent after reporting an increase in sales. EasyJet Plc (EZJ) rose 2.2 percent after agreeing to buy new Airbus SAS jets.

The FTSE 100 rose 43.72 points, or 0.7 percent, to 6,374.21 at the close of trading in London. The gauge has still lost 6.8 percent since May 22 amid concern the Federal Reserve will rein in its stimulus measures that helped send the FTSE 100 to its highest level since 1999. The FTSE All-Share Index climbed 0.6 percent today, while Ireland’s ISEQ Index added 0.3 percent.

“With activity so light ahead of the Federal Open Market Committee announcement, moves in the market are being accentuated within a tight range,” said Ioan Smith, a strategist at Knight Capital Europe Ltd. in London. “The best course of action is probably not to read too much into the price action at this stage.”

The FOMC began its two-day policy meeting today, with Fed Chairman Ben S. Bernanke scheduled to speak after the central bank’s rate decision tomorrow. Bernanke may signal the Fed is close to tapering its quantitative easing program, according to the Financial Times. The newspaper didn’t cite anyone.

The volume of shares changing hands in companies listed on the FTSE 100 was 13 percent lower than the average of the past 30 days, according to data compiled by Bloomberg.

China Speculation

Stocks rallied in early morning trading amid speculation China may ease its monetary policy. The China Securities Journal reported earlier that interest rates may be cut to help reduce companies’ debt burdens if the economic slowdown worsens. The newspaper cited Liu Yuhui, a researcher at Chinese Academy of Social Sciences.

“There is unconfirmed speculation of a China rate cut circulating that is being offered as the reason for move higher in the market,” said Knight Capital’s Smith. “But it’s more than likely related to comments from the CASS.”

HSBC climbed 2.1 percent to 696 pence and Standard Chartered, which generated about 67 percent of its 2012 operating profit in the Asia-Pacific region, rose 1.8 percent to 1,469.5 pence.

Whitbread climbed 3.6 percent to 3,031 pence, its highest price since at least 1992. The owner of Premier Inn budget hotels and Costa coffee shops reported a 3.1 percent increase in like-for-like sales in the 13 weeks to May 30. Sales at Costa outlets open at least a year jumped 8 percent while like-for-like sales at Premier Inn advanced 2.7 percent.

EasyJet Buys

EasyJet gained 2.2 percent to 1,279 pence after the low-cost airline agreed to buy 135 Airbus jets worth about $13.22 billion at list price.

Oriel Securities Ltd. said the new aircraft will bring capacity growth of 3 percent to 5 percent, in line with Ryanair Holdings Plc. Numis Securities Ltd. upgraded EasyJet to add and raised its full-year pretax earnings estimate to 441 million pounds ($690 million) from 416 million pounds.

Vodafone Group Plc (VOD) increased 0.9 percent to 184.4 pence after Liberty Global Plc made a preliminary bid for Kabel Deutschland Holding AG, pitting the cable company against the U.K. telecommunications operator for control of Germany’s largest cable provider.

RSA Upgraded

RSA Insurance Group Plc (RSA) added 2.2 percent to 120.4 pence as Credit Suisse Group AG raised its recommendation for the insurer to outperform, the equivalent of a buy rating, from neutral. The bank also increased its price estimate for the shares 10 percent to 138 pence, saying earnings are poised to improve.

Arm Holdings Plc (ARM) advanced 1.9 percent to 846 pence as Advanced Micro Devices Inc. unveiled three new products aimed at making a dent in rival Intel Corp.’s sales. AMD’s products include its first server chip based on ARM’s technology.

Aggreko Plc (AGK) lost 2.2 percent to 1,752 pence. The provider of mobile power supplies forecast underlying first-half revenue to grow about 5 percent, while trading profit will be in line with a year earlier.

SDL Plc tumbled 30 percent to 271 pence, its biggest fall on record, after the U.K. maker of translation software forecast a drop in full-year earnings and said faltering economic growth caused first-half earnings to miss the company’s predictions.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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