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| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London close: FTSE drops on BoE minutes, ex-divis, Fed minutes - FTSE closes down 23.83 at 6,755.48
- BoE's MPC votes 7-2
- Focus turns to Fed minutes
techMARK 2,796.77 -0.15%
FTSE 100 6,755.48 -0.35%
FTSE 250 15,748.92 -0.92%
London's blue chips dropped into the red on Wednesday, hit by a combination of Bank of England (BoE) minutes, ex-dividends, and a degree of profit taking.
The FTSE 100 closed 23.83 points lower at 6,755.48.
The BoE's Monetary Policy Committee (MPC) voted 7-2 in favour of maintaining interest rates, surprising the consensus, which had expected a unanimous decision.
The release of minutes from the August meeting showed evidence of the first dissent since Mark Carney became Governor, with external members Martin Weale and Ian McCafferty both voting for a rate change.
"The votes are a little dated given that earnings and inflation data has weakened since the MPC meeting so there is some chance that the votes will be a one-off or that no other members will dissent at the next meeting," CMC market analyst Jasper Lawler said.
"The lower inflation and earnings growth cast doubt over the significance of the votes and a rate-hike this year still seems unlikely, but central banks typically work off a longer timeframe than just one month's data so there is clearly a change of mood at the BoE."
Over in the States, investors are awaiting the minutes of the latest meeting of the Federal Reserve, potentially offering clues on its first interest rate rise.
In July, the Fed announced it would cut a further $10bn off monthly bond purchases and maintain interest rates at 0.25%. The US central bank has indicated that it sees no immediate need to lift rates, saying that the labour market still has room to grow.
"While I don't think that we'll see a rate hike until the end of the first quarter of next year, at the earliest, given Chairwoman Janet Yellen's very dovish stance, and the similar stance of most of the committee, two or three votes in favour of raising rates could cause quite a stir in the markets," said Alpari UK analyst Craig Erlam.
Factory orders in Britain grew faster than expected in August
A rise in overseas demand meant British factory orders grew faster than expected in August, the Confederations of British Industry (CBI)' s industrial trends survey found.
The total order book balance for the CBI rose of nine points, going from +2% in July to +11% in August, exceeding the forecast of a rise to +4% and rising well above their long-run average of -16%.
"The outlook for UK manufacturers remains healthy. Despite a dip in the pace of output growth, companies expect a strong pick-up in the next three months," said CBI deputy director general, Katja Hall.
In other news, the number of people in self-employment rose to 4.6m, its highest level in 40 years, according to the Office for National Statistics.
One of Wednesday's biggest fallers was building materials group CRH, which has seen shares fall since delivering its interim results on Tuesday morning. The company said the sector has had an "encouraging" start to the year, but that it had been trading against a backdrop of "modest, if mixed recovery" across its main markets. It also said that trading in America had been affected by severe weather conditions for the second successive year.
British American Tobacco and Mondi were both notable fallers after going ex-dividend.
With risk appetite declining, the likes of United Utilities were gaining ground thanks to their status as a haven.
Meanwhile, mining and trading giant Glencore saw its shares move marginally higher after it reported an 11% increase in its interim dividend and unveiled a $1bn share buyback after profits rose in the first half of 2014.
Fellow miners Rio Tinto and Anglo American were also lower.
Renewed concerns about an interest-rate hike this year dampened the demand for housebuilding and construction stocks, as investors worried about the potential impact from policy tightening on the housing market.
Meanwhile, another takeover rejection by infrastructure specialist Balfour Beatty sent shares in the FTSE 250 constituent firmly lower. |
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FTSE 100 - Risers
United Utilities Group (UU.) 890.00p +1.60%
Royal Mail (RMG) 445.70p +1.57%
Rio Tinto (RIO) 3,458.00p +1.27%
AstraZeneca (AZN) 4,285.00p +1.10%
Anglo American (AAL) 1,594.00p +0.98%
Coca-Cola HBC AG (CDI) (CCH) 1,365.00p +0.89%
SSE (SSE) 1,517.00p +0.80%
International Consolidated Airlines Group SA (CDI) (IAG) 344.20p +0.76%
BHP Billiton (BLT) 1,979.00p +0.71%
Meggitt (MGGT) 469.60p +0.66%
FTSE 100 - Fallers
CRH (CRH) 1,373.00p -3.85%
3i Group (III) 381.60p -2.65%
Barratt Developments (BDEV) 359.60p -2.44%
Associated British Foods (ABF) 2,826.00p -2.38%
Hammerson (HMSO) 601.50p -2.12%
Persimmon (PSN) 1,323.00p -2.00%
Mondi (MNDI) 1,004.00p -1.86%
British American Tobacco (BATS) 3,517.50p -1.79%
Experian (EXPN) 1,027.00p -1.63%
Sainsbury (J) (SBRY) 306.90p -1.60%
FTSE 250 - Risers
FirstGroup (FGP) 126.70p +6.11%
Hochschild Mining (HOC) 166.00p +3.75%
AL Noor Hospitals Group (ANH) 1,100.00p +2.04%
Diploma (DPLM) 668.50p +1.91%
Morgan Advanced Materials (MGAM) 330.00p +1.54%
Debenhams (DEB) 65.45p +1.47%
Keller Group (KLR) 879.00p +1.27%
Rightmove (RMV) 2,486.00p +1.18%
Croda International (CRDA) 2,222.00p +1.00%
Genus (GNS) 1,141.00p +0.97%
FTSE 250 - Fallers
Balfour Beatty (BBY) 238.90p -6.68%
Hikma Pharmaceuticals (HIK) 1,692.00p -6.21%
Berkeley Group Holdings (The) (BKG) 2,426.00p -6.08%
Perform Group (PER) 202.30p -5.51%
Xaar (XAR) 547.00p -5.28%
Brewin Dolphin Holdings (BRW) 280.20p -3.98%
Fisher (James) & Sons (FSJ) 1,336.00p -3.82%
COLT Group SA (COLT) 141.20p -3.62%
Thomas Cook Group (TCG) 124.00p -3.35%
Soco International (SIA) 432.00p -3.07% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks little changed after BoE minutes - BoE split on policy, minutes reveal
- Fed to release meeting minutes
- Eurozone construction output falls
FTSE 100: -0.36%
DAX: -0.21%
CAC 40: -0.32%
FTSE MIB: -0.20%
IBEX 35: 0.30%
Stoxx 600: -0.06%
European stocks were little changed as investors weighed the Bank of England's meeting minutes and awaited the Federal Reserve's notes from its latest policy decision.
The BoE's minutes on its 7 August meeting showed policymakers were unexpectedly split over whether to raise interest rates from their record low of 0.5%.
Martin Weale and Ian McCafferty - external members of the BoE's nine-member Monetary Policy Committee (MPC) - voted to raise interest rates to 0.75%, the minutes revealed.
It marked the first time policymakers have broken ranks over interest rates in three years.
The Bank has been under pressure to raise rates amid signs pointing to a pick-up in the economy but Governor Mark Carney has stressed that wages remain too weak.
"The minutes of August's MPC meeting, revealing the first split in an interest rate vote since July 2011, indicate that a 2014 rate hike cannot be ruled out," said Capital Economics.
"But the low inflation outlook suggests the odds are still in favour of a delay until early next year."
The Federal Reserve will also release minutes from its July meeting, potentially offering clues on its first interest rate rise.
The Fed in July announced it would cut a further $10bn off monthly bond purchases and maintain interest rates at 0.25%. The US central bank has indicated that it sees no immediate need to lift rates, saying that the labour market still has room to grow.
The annual Fed Bank of Kansas City's economic symposium will begin on Thursday in Jackson Hole, Wyoming. Fed Chair Janet Yellen and European Central Bank President Mario Draghi will discuss their economic outlook and monetary policy on Friday.
Meanwhile, Eurozone construction output fell 2.3% in June compared to a year ago, after rising 4.4% a month earlier.
Geopolitical tensions also weighed on stocks as the crises escalated in Iraq and Gaza.
Carlsberg, Infineon Techologies
Carlsberg slumped after the brewer slashed its full-year earnings forecast, blaming deteriorating conditions in its Eastern Europe unit including Russia, which contributes a large portion of its profits.
Infineon Technologies was lower amid reports Germany's largest chipmaker is nearing agreement to buy a US based semiconductor company for about $2bn.
Heineken gained after reporting first-half profit that beat analysts' estimates.
Balfour Beatty retreated after the UK builder rejected an increased merger bid by Carillion.
Luxottica Group slipped after Il Sole 24 Ore reported that founder Leonardo del Vecchio may ask chief executive Andrea Guerra to step down.
Royal Vopak jumped as the Dutch tank-storage provider lifted its 2014 earnings forecast.
The euro fell 0.24% to $1.3288.
Brent crude futures dropped 0.23% to $101.79 per barrel, according to the ICE. |
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| | US Market Report | | US open: Stocks slide before Fed's meeting minutes US stocks slid ahead of the release of the Federal Reserve's meeting minutes.
The Federal Reserve will also release minutes from its July meeting, potentially offering clues on its first interest rate rise.
In July, the Fed announced it would cut a further $10bn off monthly bond purchases and maintain interest rates at 0.25%. The US central bank has indicated that it sees no immediate need to lift rates, saying that the labour market still has room to grow.
The annual Fed Bank of Kansas City's economic symposium will begin on Thursday in Jackson Hole, Wyoming. Fed Chair Janet Yellen and European Central Bank President Mario Draghi will discuss their economic outlook and monetary policy.
"While I don't think that we'll see a rate hike until the end of the first quarter of next year, at the earliest, given Chairwoman Janet Yellen's very dovish stance, and the similar stance of most of the committee, two or three votes in favour of raising rates could cause quite a stir in the markets," said Alpari UK analyst Craig Erlam.
In corporate news, Apple declined after reaching a record close on Tuesday evening. The stock finished at $100.53, ahead of the previous closing record set in September 2012, on the back of optimism surrounding the gadget giant's upcoming new products.
Home-improvement retailer Lowe's was in the red despite beating analysts' forecasts with its second-quarter profits, as the company cut its revenue guidance for the full year.
West Texas Intermediate futures rose 0.57% to $93.39 per barrel, according to the ICE.
The 10-year yield climbed two basis points to 2.42%. |
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| | Broker Tips | | Broker tips: BHP Billiton, StanChart, Balfour Beatty, Debenhams Credit Suisse said it sees a "lack of upside" at BHP Billiton after the company underwhelmed the market with its demerger plans, downgrading the mining stock from 'neutral' to 'underperform'.
Credit Suisse said: "We think the shares have moved up on capital management expectations that were not delivered and with i) no buyback to maintain interest levels and ii) a full valuation in both absolute and relative terms we move to 'underperform' from 'neutral' given lack of upside relative to our [target]."
The news of $300m fine by US regulators failed to dampen the demand for Standard Chartered shares on Wednesday, with Investec providing a lift after reiterating its 'buy' stance on the stock.
The broker said that while the scale of the financial penalty appears "very high in relation to its alleged failings", the fall-out from the fine appears "contained", with the vast majority of the bank's businesses unaffected.
There is little left that Carillion can do ahead of the 'put up or shut up' deadline in its pursuit of infrastructure specialist Balfour Beatty, according to analysts at Liberum Capital, after the latter rejected a sweetened proposal from the construction group on Wednesday.
"Carillion's final throw of the dice is to try to persuade 50% of the Balfour Beatty shareholder list to vote down the PB sale at EGM - a very risky strategy for Balfour shareholders," the broker said. As for Balfour, Liberum rates the stock as a 'buy' and said that Carillion's approach will have reminded the market of the long-term value at the group.
Cantor Fitzgerald has lifted its recommendation for high street department store Debenhams from 'sell' to 'hold' after the recent sell-off in the shares, though it remains cautious about the retailer's longer-term strategy.
The broker said that there is "limited scope" for Debenhams to increase the current rate of dividend growth. | | |
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