London midday: FTSE 100 rangebound as market lacks clear direction

UK equities traded in a narrow range on Wednesday, unable to pursue a firm direction as markets continue to be conflicted with mixed signals.

At 1212 GMT, the FTSE 100 index was flat at 7020.

On Tuesday, a slide on Wall Street which caused the S&P500 to close 13 points lower pressured Asian share markets overnight, in turn, weighing on European markets.

Data on Tuesday out of the UK and US showed inflation is officially at zero in both countries. As both countries have central banks that are converging on monetary policies unlike the Eurozone which is diverging through the European Central Bank’s €1.1tn stimulus programme, there’s a conflict on how to read the low inflation rate.

On one hand, low inflation combined with current weaker energy prices mean households and consumers have more cash to spend, thus boosting economic growth. On the other hand, low inflation, if protracted, could potentially lead the UK and US economies into deflation.

For market participants, it’s a short term positive and long term negative, thus offering little direction for equity markets. As such, upside momentum for the London FTSE 100 is starting to wane. After breaking records in recent sessions to trade at all-time highs, the index is struggling to build on recent advances.

In FX markets, the British pound and euro currency are recovering against the US dollar. Sterling was up 0.6% against the US dollar and the euro, which nine days ago fell to a 12-year low of $1.0456, is 0.8% firmer on the day at $1.0989, underpinned by stronger-than-expected German business optimism.

In commodity markets, gold, which on Tuesday moved beyond a two-week intraday high, up 0.3% at $1,196. Energy has reversed early losses, and Brent crude is up 1% to $55.82 a barrel while Nymex crude added 0.9% to $47.71 a barrel.

Balfour Beatty shares gain despite poor numbers

Shares in UK construction firm Balfour Beatty rose 6.6% as it pledged to implement cost saving after reporting deep losses last year which forced it to suspend its dividend.

Barclays shares dropped 2.8% after broker Investec Securities downgraded its rating on the bank to 'hold'.

United Utilities Group fell 0.3%, paring earlier gains after the company said it expects a modest increase in underlying operating profit for current year earnings compared with the previous year.

Profits at UK housebuilder Bellway jumped by more than a half to a record in the first six months of its financial year, prompting the company to hike its interim dividend by 56.3%. The stock rose 3.8%.

techMARK 3,244.91 +0.08%
FTSE 100 7,006.60 -0.19%
FTSE 250 17,548.24 -0.18%

FTSE 100 - Risers
TUI AG Reg Shs (DI) (TUI) 1,224.00p +3.47%
HSBC Holdings (HSBA) 584.30p +1.04%
Rio Tinto (RIO) 2,911.00p +0.94%
Mondi (MNDI) 1,351.00p +0.90%
Ashtead Group (AHT) 1,140.00p +0.80%
Johnson Matthey (JMAT) 3,423.00p +0.80%
Fresnillo (FRES) 713.00p +0.71%
Hikma Pharmaceuticals (HIK) 2,194.00p +0.64%
Antofagasta (ANTO) 728.50p +0.62%
Royal Dutch Shell 'A' (RDSA) 2,091.00p +0.60%

FTSE 100 - Fallers
Barclays (BARC) 251.10p -2.84%
Weir Group (WEIR) 1,755.00p -2.06%
Standard Chartered (STAN) 1,099.00p -1.88%
InterContinental Hotels Group (IHG) 2,608.00p -1.81%
Intertek Group (ITRK) 2,491.00p -1.77%
Sky (SKY) 1,013.00p -1.65%
Capita (CPI) 1,185.00p -1.41%
Experian (EXPN) 1,140.00p -1.38%
Travis Perkins (TPK) 1,967.00p -1.30%
SABMiller (SAB) 3,623.00p -1.15%

FTSE 250 - Risers
Balfour Beatty (BBY) 246.50p +6.62%
Hunting (HTG) 526.50p +5.30%
Soco International (SIA) 168.00p +4.35%
Bellway (BWY) 2,090.00p +4.29%
Redrow (RDW) 358.00p +3.95%
Vedanta Resources (VED) 561.00p +3.41%
Premier Oil (PMO) 145.40p +2.39%
Acacia Mining (ACA) 270.00p +1.89%
Bank of Georgia Holdings (BGEO) 1,738.00p +1.88%
Jimmy Choo (CHOO) 171.60p +1.84%

FTSE 250 - Fallers
Card Factory (CARD) 282.00p -5.37%
Moneysupermarket.com Group (MONY) 271.90p -4.93%
RPS Group (RPS) 240.30p -3.42%
Ocado Group (OCDO) 335.40p -2.98%
Greencore Group (GNC) 318.10p -2.96%
Serco Group (SRP) 178.00p -2.52%
International Personal Finance (IPF) 492.00p -2.48%
Infinis Energy (INFI) 188.00p -2.08%
Mitchells & Butlers (MAB) 443.00p -1.93%
Entertainment One Limited (ETO) 323.80p -1.88%