Date: Wednesday 15 Aug 2012
- MPC hints at further QE
- UK jobless rate improves in July
- ENRC leads miners lower
Stocks held on to early losses on Wednesday afternoon, meaning that the FTSE 100 was trading within a narrow range for most of today's session with heavy falls in the mining sector keeping the index firmly in the red.
Market analyst Michael Hewson from CMC Markets said this afternoon: "Markets have had a particularly negative bias today, not surprising given that they are close to four-month highs and economic data continues to point to a fairly uncertain outlook."
The Monetary Policy Committee (MPC) voted unanimously this month in favour of keeping the central bank's key interest rate at 0.5% and maintaining the asset purchase programme at £375bn. The central bank said it was waiting to see what impact its Funding for Lending Scheme (FLS) - aimed at boosting bank credit - would have on the economy.
"For most members, the decision this month was relatively straightforward," the minutes said. However, for others, "the decision was nevertheless more finely balanced, since a good case could be made at this meeting for more asset purchases."
"Our central view is that the MPC will give the green light for another £50bn of QE, most likely when the current programme expires in November," said analysts at Investec.
Meanwhile, the UK unemployment rate fell to 8.0% in July from 8.1% in June, versus economists' expectations of no change. The number of people claiming Job-seeker's Allowance eased by by 5,900 to 1.59m in July, while the number of people out of work dropped 46,000 to 2.56m in the three months to June.
Across the pond, markets opened tentatively as investors had to sift through a barrage of mixed US economic data. The Empire State manufacturing index and consumer price index both came in below expectations, while industrial output figures grew more than forecast.
Diversified mining giant Eurasian Natural Resources Corp (ENRC) dropped after being hit by a fall in commodity prices and challenging economic conditions in the first half: both revenues and profits were significantly lower than the same period in 2011 while the group slashed its interim dividend by 59.4%.
Sector peers Anglo American, Fresnillo, Rio Tinto and Vedanta were also heavy fallers, though they all went ex-dividend today, meaning that investors will no longer have the right to their respective dividends.
Cigarette giants Imperial Tobacco and British American Tobacco (BATS) were being weighed down, along with the global tobacco sector, after a legal challenge to Australia's decision to insist cigarettes are sold in plain packaging was thrown out. BATS also went ex-dividend today.
Standard Chartered jumped after having reached a $340m settlement with the New York Department of Financial Services (DFS) over claims its US subsidiary illegally processed payments for Iran. Investec said that while uncertainty still remains, the settlement reduces the risk of the group loosing its banking licence. Bank of America and Oriel Securities both upgraded their ratings on the stock to 'buy' today.
Insurance group Resolution was also a high riser after abandoning plans to split itself up and saying it would overhaul its board structure.
Transport firm FirstGroup was a heavy faller in spite of winning the West Coast franchise, awarded by the Department for Transport. The contract runs from December 2012 to 2026 and has annual revenues of around £900m for FirstGroup.
Panmure Gordon said this morning that while this is a "significant franchise win", it was probably already priced into the stock with shares having risen strongly in recent weeks.
International infrastructure specialist Balfour Beatty headed the other way after underlying profits came in higher than expected.
FTSE 100 - Risers
Standard Chartered (STAN) 1,426.50p +4.12%
Resolution Ltd. (RSL) 226.30p +2.86%
ARM Holdings (ARM) 584.00p +1.74%
Rexam (REX) 441.00p +1.50%
Experian (EXPN) 1,002.00p +1.01%
Shire Plc (SHP) 2,018.00p +0.95%
Burberry Group (BRBY) 1,374.00p +0.88%
Centrica (CNA) 325.70p +0.87%
Capita (CPI) 738.50p +0.82%
United Utilities Group (UU.) 728.00p +0.76%
FTSE 100 - Fallers
Eurasian Natural Resources Corp. (ENRC) 379.60p -8.46%
Rio Tinto (RIO) 3,038.00p -4.76%
Vedanta Resources (VED) 919.50p -4.22%
Evraz (EVR) 262.40p -3.95%
Anglo American (AAL) 1,939.50p -3.87%
CRH (CRH) 1,117.00p -3.71%
Fresnillo (FRES) 1,489.00p -3.62%
Kazakhmys (KAZ) 715.00p -2.46%
BHP Billiton (BLT) 1,936.50p -2.27%
Polymetal International (POLY) 906.00p -2.16%
FTSE 250 - Risers
Salamander Energy (SMDR) 212.90p +5.61%
Home Retail Group (HOME) 89.35p +5.49%
Interserve (IRV) 335.20p +3.46%
EnQuest (ENQ) 118.10p +2.79%
Barratt Developments (BDEV) 146.60p +2.73%
Informa (INF) 406.00p +2.68%
BH Global Ltd. USD Shares (BHGU) 11.59 +2.57%
Petra Diamonds Ltd.(DI) (PDL) 102.00p +2.51%
Euromoney Institutional Investor (ERM) 764.50p +2.21%
Persimmon (PSN) 682.50p +2.17%
FTSE 250 - Fallers
Man Group (EMG) 79.40p -7.73%
FirstGroup (FGP) 243.20p -6.10%
Ruspetro (RPO) 142.90p -5.11%
New World Resources A Shares (NWR) 288.10p -4.41%
Daejan Holdings (DJAN) 3,059.00p -3.50%
Phoenix Group Holdings (DI) (PHNX) 476.80p -3.13%
NMC Health (NMC) 192.80p -3.12%
Petropavlovsk (POG) 432.80p -2.89%
Travis Perkins (TPK) 1,065.00p -2.65%
SDL (SDL) 650.00p -2.55%
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