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London open: Stocks rise as Sainsbury’s and Glencore rally
UK stocks rose on Wednesday, as a positive trading update from J Sainsbury lifted supermarket stocks. J Sainsbury topped the FTSE 100 after saying it expected full-year underlying pre-tax profit to be moderately ahead of its £548m forecast ,as it reported a 0.3% increase in second-quarter retail sales, excluding fuel. The report lifted shares in Morrison Supermarkets and Tesco.
Glencore also rallied after saying it has taken proactive steps to position the mining company to withstand current market conditions including weak commodity prices. The group’s stocks plunged on Monday after Investec highlighted debt concerns and said there was little equity value for shareholders.
Turning to economic data, Nationwide revealed UK house prices climbed 0.5% month-on-month in September compared with an upwardly revised 0.4% increase in August and with analysts’ expectations for a 0.4% gain. On a year-on-year basis, prices grew 3.8%, faster than the 3.2% pace seen in July and in line with consensus expectations.
“The data in recent months provides some encouragement that the pace of house price increases may be stabilising close to the pace of earnings growth,” said Nationwide chief economist Robert Gardner. “However, the risk remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability.”
German retail sales fell 0.4% month-on-month compared with a sharp 1.6% rise registered in July and falling short of analysts’ expectations for a 0.2% gain, the Federal Statistics Office said. On a year-on-year basis, retail sales grew 2.5% but remained short of the 3.1% consensus forecast and comfortably below the 3.8% year-on-year increase registered in the previous month.
German unemployment rose by 2,000 in September, compared to estimates for a 5,000 drop and following the previous month’s 6,000 decline. The unemployment remained at 6.4% this month, as expected.
Still to come, revised UK gross domestic product figures are due at 09:30 BST, followed by Eurozone inflation at 1000 BST, the US private payrolls report at 1315 BST and the Chicago manufacturing purchasing mangers’ index at 1445 BST.
The reports come amid speculation on an interest rate rise by the Bank of England and the Federal Reserve and on the expanding of the European Central Bank’s quantitative easing programme.
Federal Reserve Chair Janet Yellen will speak after the close in St. Louis, potentially elaborating on her remarks that she expected the central bank will raise interest rates this year.
