- Middle-East tensions dampen sentiment
- BoE holds rates; ECB decision eyed
- Investors await US jobless claims
After swinging into negative territory briefly, the FTSE 100 was back above water by Thursday lunchtime ahead of interest rate decisions in the UK and Europe. Meanwhile, investors were showing some caution this morning on the back of tensions in the Middle East.
Speaking earlier this morning, market strategist Ishaq Siddiqi from ETX Capital said: "European markets surrendered morning gains ahead of the BOE and ECB monthly policy meetings as increasing tensions between Turkey and Syria prompted investors to cut risk positions. Turkey firing at targets in Syria and unconfirmed reports that Iran was mobilising troops on the Turkish-Iranian border curbed upside momentum."
However, buying had picked up by midday ahead of the announcement by the Bank of England. As expected, the BoE's Monetary Policy Committee (MPC) maintained the Bank Rate at 0.5% and the asset purchase programme (other known as quantitative easing, or QE) at £375bn.
According to Chris Crowe from Barclays Research, "Further easing in November [...] seems likely in the absence of significant upside news in the interim. We are fairly confident in forecasting an additional £50bn in QE will be announced at the November meeting. We also continue to forecast a 25 basis point rate cut, but this is a much more marginal call."
The European Central Bank (ECB) is also expected to remain in 'wait-and-see' mode when it reveals its policy decision after midday. Analysts believe that the ECB will wait for Spain to make the next move considering that it already announced its bond purchase plan for ailing countries that request aid. The key interest rate currently stands at 0.75% after it was cut by 25 basis points early in the year. The deposit rate is at 0%.
Markets will also be keeping a close eye on weekly jobless claims figures from the US out before the market open in New York (around 13:30 London time). Consensus estimates are for claims to rise to 370k last week from 359k the week before.
US stock futures are pointing to gains when Wall Street opens also ahead of the release of the Federal Open Market Committee (FOMC) minutes.
In Eurozone news, Spain's Treasury sold €3.99bn in two-,three- and five-year debt, the top end of its targeted range. While bid-to-cover ratios improved across all maturities, the yields on offer fell.
The Troika has said it expects the Greek economy to contract by 5% in 2013, notably worse than the 3.8% fall in gross domestic product (GDP) expected by Greece's own government.
FTSE 100: Tate & Lyle gains on broker upgrade
Sweeteners and food products group Tate & Lyle was the high riser in early trading after Credit Suisse raised its recommendation for the stock from 'neutral' to 'outperform'. The broker said: "There is no easy way to value Tate & Lyle, but it does seem to us to be a better business for all the changes we have seen and that this is not reflected in the share price (which is down 8% year to date versus a staples sector up 18%)."
According to reports, BHP Billiton is among the companies talking to Petrobras about buying a stake in its's Gulf of Mexico oilfields. The miner was trading in the red today after analysts at Morgan Stanley lowered their price target for the shares
from 2,180p to 2,100p.
Pharmaceuticals behemoth GlaxoSmithKline gained after saying its joint venture company, Shionogi-ViiV Healthcare, has completed an initial clinical registration package for dolutegravir, its treatment for HIV patients.
Supermarket peers Tesco and Sainsbury were among the stocks in the red following their results and trading update yesterday, respectively. Exane BNP Paribas reduced its target price for Tesco this morning from 325p to 300p and reiterated its 'underperform' rating on the shares.
FTSE 250: Halfords jumps on solid Q2, new CEO
Car and bike parts retailer Halfords jumped after appointing a new Chief Executive Officer following the abrupt departure of David Wild in the summer, as it revealed that full-year profits would be at the top end of guidance after a strong second quarter.
The company expects pre-tax profit to be in the region of £40-42m in the first half on the back of its second quarter performance and an acceleration of operating cost investment. The consensus estimate prior to the announcement stood at £35.8m. Both Panmure Gordon and Seymour Pierce raised their target prices for the shares today.
Fashion chain Ted Baker was in demand after saying that the reaction to its autumn/winter collections has been positive as it unveiled a solid first-half trading performance.
Transport company FirstGroup was firmer following the 20.7% drop the day before after the Department for Transport cancelled the decision to award the group the West Coast rail franchise. UBS this morning has upgraded the stock from 'sell' to 'neutral' after yesterday's big fall, but said that there are still "major challenges ahead". Morgan Stanley also raised its rating to 'equal weight', while HSBC downgraded to 'underweight'.
FTSE 100 - Risers
Next (NXT) 3,584.00p +2.43%
Carnival (CCL) 2,369.00p +2.42%
Tate & Lyle (TATE) 689.00p +2.15%
Smiths Group (SMIN) 1,060.00p +2.02%
ARM Holdings (ARM) 600.00p +1.87%
Weir Group (WEIR) 1,794.00p +1.82%
InterContinental Hotels Group (IHG) 1,668.00p +1.77%
Tullow Oil (TLW) 1,420.00p +1.72%
Kingfisher (KGF) 269.00p +1.70%
Hargreaves Lansdown (HL.) 654.50p +1.55%
FTSE 100 - Fallers
Johnson Matthey (JMAT) 2,370.00p -1.94%
Tesco (TSCO) 322.40p -1.69%
BHP Billiton (BLT) 1,911.00p -1.65%
Amec (AMEC) 1,137.00p -1.13%
BP (BP.) 434.15p -1.12%
G4S (GFS) 265.20p -1.04%
Eurasian Natural Resources Corp. (ENRC) 313.60p -0.85%
Rio Tinto (RIO) 2,912.50p -0.75%
Royal Dutch Shell 'B' (RDSB) 2,209.00p -0.70%
Morrison (Wm) Supermarkets (MRW) 282.90p -0.67%
FTSE 250 - Risers
Halfords Group (HFD) 302.80p +13.83%
Victrex (VCT) 1,400.00p +5.18%
Rentokil Initial (RTO) 86.70p +4.46%
Bwin.party Digital Entertainment (BPTY) 114.10p +4.39%
Carillion (CLLN) 287.30p +3.72%
Pace (PIC) 172.80p +3.60%
Home Retail Group (HOME) 95.95p +3.23%
International Personal Finance (IPF) 315.90p +3.03%
New World Resources A Shares (NWR) 273.80p +2.89%
Stobart Group Ltd. (STOB) 115.70p +2.84%
FTSE 250 - Fallers
Petra Diamonds Ltd.(DI) (PDL) 113.80p -2.15%
Afren (AFR) 139.30p -1.76%
Brewin Dolphin Holdings (BRW) 170.00p -1.39%
Brown (N.) Group (BWNG) 274.20p -1.19%
JD Sports Fashion (JD.) 713.00p -0.97%
Essar Energy (ESSR) 118.20p -0.92%
Invensys (ISYS) 235.70p -0.88%
Bovis Homes Group (BVS) 496.30p -0.84%
RIT Capital Partners (RCP) 1,139.00p -0.78%
Domino Printing Sciences (DNO) 566.00p -0.61%