Central Banks Tapering:
The likelihood of a US rate hike this year has increased as the US services sector has expanded at a faster pace than expected. The ISM non-manufacturing index reached 57.1 for the month of September, well above the 50 mark which means that the sector for services is expanding. The latter was helped mainly by business activity, new orders and employment. The US dollar is pushing higher with the dollar index up by 0.2% and Gold is still under pressure around $1,265 an ounce. In Europe, the European Central Bank has released mixed signals about their €80bn monthly Quantitative Easing programme which is meant to end in March 2017, hinting at scaling it down by €10bn a month. This triggered jitters into the bond markets as investors were actually expecting more stimulus from the ECB. The Euro is slightly down against the US dollar at around 1.118.
Tesco (207p +9.75%) soared, hitting a 14-month high, as Britain’s biggest retailer reported a 60% rise in first-half profits.
United Utilities (951p -4.37%) moved sharply lower after the stock was downgraded, on valuation concerns at RBC Capital Markets.
In Europe, Telecoms group SFR (€25.36 -4.57%) fell after France’s market watchdog blocked an all share buyout offer from rival Altice. BMW (€78.18 +1.15) closed up after reporting new car registrations for September up 9%.
Twitter ($24.87 +5.73%) gained after reports indicated that the company could receive takeover bids as early as this week.
Micron Technologies ($17.70 -0.56%) settled lower as a disappointing gross interest margin masked a bottom line beat on Q4 earnings.