Stocks Rise As Wall Street Sets Record Highs

Stocks in London closed higher on Wednesday, continuing Tuesday's rally on the back of stronger oil and commodity prices and shrugging off uninspiring UK GDP data.

Meanwhile, in New York all three major indices hit new intra-day record highs ahead of the Federal Reserve's interest rate decision later Wednesday.

The FTSE 100 index closed up 0.2%, or 17.50 points at 7,452.32. The FTSE 250 ended 0.6% higher, or 121.38 points, at 19,762.66, and the AIM All-Share closed up 0.5%, or 4.80 points, at 983.64.

The BATS UK 100 ended up 0.1% at 12,648.80, the BATS 250 closed up 0.7% at 17,988.69, and the BATS Small Companies ended 0.1% higher at 12,133.71.

The UK economy expanded at a slightly faster pace in the second quarter, preliminary data published by the Office for National Statistics showed Wednesday.

Gross domestic product climbed 0.3% sequentially, after expanding 0.2% at the start of the year. The quarterly growth came in line with expectations. The growth was driven by the dominant service sector, while construction and manufacturing were the largest drags, ONS said.

Services output grew 0.5% from prior quarter and farm output advanced moderately by 0.6%. Meanwhile, production and construction declined 0.4% and 0.9%, respectively.

On a yearly basis, the economy expanded 1.7% in the second quarter, as expected, versus 2.0% in the first quarter.

Analysts at Capital Economics said the "sluggish" growth is likely to cause the Bank of England to hold off on interest rate hikes until 2018, but noted the monthly output figures for July suggest growth may pick up in the third quarter.

The GDP figure did no harm to the pound. The UK currency was quoted at USD1.3060 at the London equities close compared to USD1.3039 at the same time on Tuesday.

Stocks in New York were climbing at the London equities close. The DJIA was up 0.5% and hit an intra-day record high of 21,742.70.

Meanwhile, the S&P 500 index was up 0.1%, while the Nasdaq Composite was up 0.2%, both also recording record highs during trading.

The Dow was helped by airplane maker Boeing, which reported a turnaround to a profit in the second quarter as lower revenues were more than offset by a decline in costs and expenses.

Meanwhile, soft-drinks company Coca-Cola reported a profit for the second-quarter that declined 60% from last year, as the company incurred a charge of USD653 million related to refranchising its North America bottling operations. However, adjusted earnings per share topped analysts' expectations.

Social network Facebook will report quarterly earnings after the Wall Street close.

Still to come in Wednesday's economic calendar is the US Federal Reserve's monetary policy statement and interest rate decision at 1900 BST.

"Traders are sceptical the Fed will hike rates again this year, but it may start to reduce the size of its balance sheet. The Fed has a history of warning the market well in advance of changes to their monetary policy, so tonight’s statement will be watched carefully," said David Madden, market analyst at CMC.

Back in London, broadcaster ITV closed among the best FTSE 100 performers, up 1.8%. ITV said its performance in the first six months of the year was in line with expectations as it reiterated its full-year guidance.

Pretax profit fell 10% to GBP381.0 million from GBP425.0 million as total external revenue dipped 3%. ITV said a drop in net advertising revenue was driven by "ongoing economic and political uncertainty". However, ITV said it has already secured 85% of expected full-year revenue and that it is on track to deliver "good organic revenue growth".

Also rising was catering firm Compass Group, up 1.5%, as it maintained full-year expectations in its third-quarter results to June 30.

Compass reported organic revenue growth in the third quarter of 3.9%, or 5.0% excluding the impact of Easter. Growth accelerated in the quarter with strong net new business in North America and good progress in Europe, but a challenging environment in Rest of World. Nine-month organic revenue was up 3.7%.

Large-cap housebuilders did well, with Barratt Developments up 1.4%, Persimmonup 1.2%, and Taylor Wimpey up 1.1%.

UK mortgage approvals came in at 40,200 in June compared to 40,287 in May, according to figures released Wednesday by UK Finance. Similarly low levels were last seen in late 2016. Gross mortgage borrowing totalled GBP13.0 billion in June. At the same time, net mortgage borrowing was 2.6% higher than a year ago.

Drugs giant GlaxoSmithKline was among the prominent fallers, down 1.4% as it lowered its adjusted earnings guidance for the full-year.

The pharmaceutical giant said it now expects to grow annual adjusted earnings per share at constant currency by 3% to 5% over 2017, lowering its target from the original aim to grow earnings by 5% to 7%.

That move came as GSK reported adjusted EPS of 27.2 pence for the second quarter to the end of June, up 12% from the previous year at actual exchange rates following the depreciation of sterling, but down 2% at constant currency.

Under the guidance of new Chief Executive Emma Walmsley, GSK will put up for sale 130 smaller brands and look to cut back on 30 clinical programmes, narrowing its investment focus.

Payroll software firm Sage Group fell 3.3%, the worst FTSE 100 performer. Late Tuesday, Sage said it will acquire US cloud-based financial software firm Intacct for USD850.0 million. Sage said the deal for the California-based business will be funded through cash and rolled-over share options .

In addition, Sage said Wednesday that its organic revenue rose by 6.3% in the third quarter to the end of June, resulting in growth of 6.4% for the first nine months of the current financial year.

Brent oil pushed higher and was quoted at USD50.73 a barrel at the close, versus USD49.94 at the same time the prior day.

The North Sea benchmark broke though the USD50 a barrel mark after US oil inventories dropped a stunning 10.23 million barrels at the end of last week, according to American Petroleum Institute estimates on Tuesday. Analysts were expecting inventories to have dropped by only 3.0 million barrels.

On Monday, Saudi Arabia announced it would cut August exports to 6.6 million barrels a day. Nigeria will no longer be exempt from OPEC's supply quota deal with Russia.

In the FTSE 250, Tullow Oil closed as the biggest gainer, up 7.9%. Although impairments dragged it to an interim loss of USD518.8 million, it reported a 46% rise in revenue to USD788.0 million. Gross profit jumped at an even higher rate of 66% to USD303 million from USD182 million.

Gold lost some ground and an ounce of the precious metal was quoted at USD1,248.16 at the close against USD1,250.53 at the same time on Tuesday.

The euro stood at USD1.1634 at the European equities close, dropping from USD1.1652 the prior day. The weaker single currency helped large stocks in mainland Europe, as the CAC 40 in Paris ended up 0.6% while the DAX 30 in Frankfurt ended 0.3% higher.

The economic calendar on Thursday sees the German consumer confidence survey for August released at 0700 BST.

The rest of the day is US-focused, with the Chicago Fed National Activity index, weekly jobless claims, monthly wholesale inventories and goods trade balance figures all coming out at 1330 BST.

An exceptionally busy UK corporate calendar on Thursday sees full-year results from drinks company Diageo and pay TV firm Sky.

Half-year results are due from oil giant Royal Dutch Shell, Lloyds Banking Group, drugs firm AstraZeneca, miner Anglo American, asset manager Schroders, British American Tobacco, pest control firm Rentokil Initial, analytics firm RELX and medical equipment supplier Smith & Nephew. Mining firm Glencore will release half-year production figures.