- Markets tentative ahead of FOMC announcement
- Stocks already priced in stimulus
- Next and BAE provide a drag in London
The FTSE 100, like other stock markets across Europe, was broadly flat by Thursday lunchtime ahead of a pivotal policy decision by the Federal Reserve expected later on.
Yesterday, the STOXX Europe 600 Index rose to a 14-month high after the German Constitutional Court approved the European Stability Mechanism (ESM), clearing the way for Germany to sign the agreement into law.
"European financial markets are on the soft side this morning, with investors holding back from building risk positions ahead of the Federal Open Market Committee meeting after the European closing bell," said market strategist Ishaq Siddiqi from ETX Capital. "European indices are in tight ranges as are peripheral bonds while the dollar
earlier hit seven-month lows versus the yen on the expectation that the Fed will resort to stimulus measures," he said.
Markets have already priced in a high probability of a new round of monetary stimulus. Analyst Henry Skeoch from Barclays Research said: "should the Fed fall short of market expectations, there may be risks of a reversal of the recent strong performance in risk assets and sharp sell-off in core rates."
FTSE 100: Next, BAE are heavy fallers in morning trade
High Street retailer Next tanked despite a decent first half in which revenues rose 4.8% and profits increased 10.2%. However, the firm warned that the second half has got off to a poor start: "Disappointing sales in an unusual August and early September reinforce the wisdom of [our] conservative approach."
The stock was also pressured lower this morning after Investec downgraded its rating from buy to hold, highlighting that the shares
are close to an all-time high.
Defence group BAE Systems was also a heavy faller, pulling back after surging yesterday on discussions with aerospace giant EADS regarding a "possible combination" of the businesses. Investec, Societe Generale and Oriel Securities cut their recommendations for the stock this morning.
Accountancy software group Sage was among the risers as big speculation continues to lift the stock. The Daily Mail reported earlier this week that private-equity firms KKR & Co and Blackstone could make a £5.58bn offer.
British telecoms giant BT was extending yesterday's gains after sealing a "ground-breaking" £152m deal on afternoon for a range of exclusive live rights for Premiership Rugby, dealing a massive blow to current broadcaster BSkyB.
FTSE 250: Premier Farnell, Imagination Tech head opposite directions
Electronics components supplier Premier Farnell surged after seeing the year-on-year decline in its top line slow in the second quarter, as it sacrificed margin to protect market share.
The day after the much ballyhooed release of Apple's iPhone5, chip designer Imagination Technologies released a well-timed trading update in which it revealed its business momentum has continued in the new financial year. Nevertheless, shares fell sharply early on.
Homewares retailer Dunelm rose after saying pre-tax profit climbed a better than expected 15.1% in the first half and while it remains cautious of the UK consumer environment it is confident in the future prospects of the business.
FTSE 100 - Risers
Resolution Ltd. (RSL) 222.00p +2.16%
Rolls-Royce Holdings (RR.) 846.00p +2.11%
Hargreaves Lansdown (HL.) 638.50p +1.35%
Vodafone Group (VOD) 176.30p +1.32%
Sainsbury (J) (SBRY) 336.50p +1.32%
BG Group (BG.) 1,254.50p +1.21%
Prudential (PRU) 831.50p +1.09%
SSE (SSE) 1,383.00p +1.02%
Aberdeen Asset Management (ADN) 297.00p +0.92%
ARM Holdings (ARM) 560.00p +0.90%
FTSE 100 - Fallers
BAE Systems (BA.) 340.50p -6.35%
Next (NXT) 3,365.00p -5.98%
Vedanta Resources (VED) 956.50p -2.94%
ICAP (IAP) 329.80p -2.54%
Evraz (EVR) 263.30p -2.12%
Glencore International (GLEN) 352.00p -2.11%
Rio Tinto (RIO) 3,013.00p -2.08%
Eurasian Natural Resources Corp. (ENRC) 328.40p -1.82%
Ashmore Group (ASHM) 322.90p -1.58%
Kazakhmys (KAZ) 667.50p -1.55%
FTSE 250 - Risers
Premier Farnell (PFL) 190.00p +10.59%
Essar Energy (ESSR) 112.30p +3.89%
Barratt Developments (BDEV) 164.50p +3.59%
SDL (SDL) 665.00p +3.58%
Stobart Group Ltd. (STOB) 116.50p +3.28%
Ophir Energy (OPHR) 614.00p +3.19%
Atkins (WS) (ATK) 684.00p +2.55%
Dunelm Group (DNLM) 640.50p +2.48%
Persimmon (PSN) 757.00p +2.44%
Gem Diamonds Ltd. (DI) (GEMD) 182.50p +2.18%
FTSE 250 - Fallers
Imagination Technologies Group (IMG) 580.50p -4.84%
Home Retail Group (HOME) 95.20p -4.23%
Debenhams (DEB) 96.60p -3.40%
Bumi (BUMI) 284.50p -2.93%
Talvivaara Mining Company (TALV) 152.30p -2.62%
EnQuest (ENQ) 120.50p -2.59%
Afren (AFR) 134.10p -2.40%
Computacenter (CCC) 399.80p -2.23%
Bodycote (BOY) 386.10p -2.15%
Investec (INVP) 387.00p -2.03%