London midday: Stocks drop as traders weigh Fed and BoJ policy

UK stocks were in the red on Thursday as investors continued to weigh policy decisions from the Federal Reserve and the Bank of Japan.

The Federal Open Market Committee kept interest rates unchanged at 0.25% to 0.50% on Wednesday, as expected, but left the door open to a rate increase at the next meeting in June.

Policymaker Esther George also voted to raise rates for a second month in a row as the Fed softened its tone on the economic outlook.

The Fed said the labour market had "improved further even as growth in economic activity appears to have slowed".

Chief market economist at Markit, Chris Williamson, said: “Unless there’s a robust pick up in the data for May, Fed policymakers are likely to be looking at some gloomy economic trends at the June meeting, making a rate hike hard to justify.

“The Fed may also not want to unsettle markets with a rate hike just days before the UK’s 23 June referendum on remaining in the EU.”

The Bank of Japan shocked the market by voting to refrain from any extra stimulus measures to bolster the stagnant economy.

The BoJ decided to keep its negative interest rate of -0.10% in place and voted to continue its asset purchase programme.

Alongside the BoJ’s policy announcement, official data showed annualised deflation of 0.1% in March, compared to inflation of 0.3% the previous month. In better news, the jobless rate unexpectedly fell to 3.2% in March from 3.3% in February.

In the Eurozone, data from the European Commission showed economic sentiment in the bloc improved a little more than expected in April. The EC’s economic sentiment indicator rose to 103.9 in April from 103.0 in March, beating expectations for a reading of 103.4.

Still to come, German inflation is at 1300 BST, US initial jobless claims at 1330 BST and US gross domestic product at 1330 BST.

Meanwhile, oil prices steadied as traders locked in profits. At 1149 BST, Brent crude rose 0.10% to $47.23 per barrel and West Texas Intermediate climbed 0.11% to $45.38 per barrel.

On the company front, shares in Lloyds Banking Group declined after the lender reported a 6% fall in underlying profit to £2.05bn due to the sale of TSB.

Taylor Wimpey gained after the company said the prospect of a British exit from the EU had not affected trading in the first four months of the year.

Anglo American advanced as it agreed to sell its niobium and phosphates businesses in Brazil to China Molybdenum for a cash consideration of $1.5bn.

Berkely Group was under the cosh after Credit Suissed downgraded the stock to ‘underperform’ from ‘neutral’ and cut the price target to 2,372p from 3,101p, saying it was its least preferred stock in the sector.

Tullow Oil rallied after saying 2016 capital expenditure would be cut by $100m to $1bn “with further savings expected”.

Weir Group jumped as it reported trading that was “slightly ahead” of expectations in its first quarter on Thursday.

Schroders was in the red as it said first quarter pre-tax profits fell to £137.9m from £141.7m.

Market Movers

FTSE 100 (UKX) 6,261.01 -0.93%
FTSE 250 (MCX) 16,972.84 -0.65%
techMARK (TASX) 3,069.61 -1.03%

FTSE 100 - Risers

Anglo American (AAL) 716.50p 2.81%
Rio Tinto (RIO) 2,280.50p 2.08%
BHP Billiton (BLT) 939.50p 1.44%
Intu Properties (INTU) 309.70p 1.21%
Rolls-Royce Holdings (RR.) 681.00p 1.19%
Fresnillo (FRES) 1,083.00p 0.93%
Randgold Resources Ltd. (RRS) 6,435.00p 0.86%
Morrison (Wm) Supermarkets (MRW) 190.50p 0.63%
Direct Line Insurance Group (DLG) 354.30p 0.60%
Taylor Wimpey (TW.) 188.00p 0.48%

FTSE 100 - Fallers

Legal & General Group (LGEN) 225.00p -5.34%
ITV (ITV) 222.20p -4.96%
Merlin Entertainments (MERL) 430.80p -3.41%
Informa (INF) 643.50p -3.38%
Provident Financial (PFG) 2,890.00p -2.53%
Berkeley Group Holdings (The) (BKG) 3,041.00p -2.47%
BAE Systems (BA.) 476.40p -2.40%
Relx plc (REL) 1,193.00p -2.37%
Associated British Foods (ABF) 3,085.00p -2.34%
St James's Place (STJ) 888.00p -2.20%

FTSE 250 - Risers

Tullow Oil (TLW) 272.60p 8.48%
Weir Group (WEIR) 1,198.00p 6.39%
Ophir Energy (OPHR) 88.90p 3.37%
NCC Group (NCC) 270.40p 2.04%
Shawbrook Group (SHAW) 298.90p 1.77%
Sophos Group (SOPH) 211.60p 1.49%
Carillion (CLLN) 297.10p 1.33%
Serco Group (SRP) 99.15p 1.33%
Howden Joinery Group (HWDN) 491.40p 1.26%
Michael Page International (MPI) 415.30p 1.22%

FTSE 250 - Fallers

Cobham (COB) 163.50p -7.21%
Victrex plc (VCT) 1,417.00p -6.65%
Elementis (ELM) 216.00p -4.89%
Tullett Prebon (TLPR) 342.90p -4.83%
IP Group (IPO) 181.90p -4.21%
Ted Baker (TED) 2,470.00p -4.04%
William Hill (WMH) 312.30p -3.73%
UBM (UBM) 564.00p -3.67%
Witan Inv Trust (WTAN) 755.00p -3.58%
National Express Group (NEX) 327.50p -3.19%