London open: FTSE gains ahead of BoE, Brexit White Paper

London stocks were slightly higher in early trading on Super Thursday, as investors awaited a rate decision from the Bank of England, the Inflation Report and minutes together with the government's White Paper on Brexit.

As of 0835 GMT the FTSE 100 was up 0.21% or 15.05 points at 7,122.70 alongside a slight gain of 0.2% for the pound to 1.2683 US dollars.

The BoE is widely expected to leave interest rates and its asset-purchase programme on hold. The minutes, Inflation Report and rate announcement are all due at 1200 GMT, while BoE governor Mark Carney’s speech is at 1230 GMT.

Economists expect BoE Governor Mark Carney to strike a more hawkish note in a bid to push back on inflation expectations, possibly boosting the value of the pound.

Markets are correct to expect the Monetary Policy Committee to sound a more 'hawkish' note in its latest Inflation Report, said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

"The MPC might also talk up the pound, as the cost shock is outweighing the competitiveness gain," he said, but concluded that: "the Committee, however, will raise rates only if wages accelerate; surveys point to the opposite."

That came as investors were pricing in a 45% chance that the bank rate would rise before 2017 was out, versus 30.0% at the time of the previous IR.

"It would be the ultimate irony if the Bank of England’s hasty actions in August had helped to hasten this squeeze on consumers," chipped in Michael Hewson, chief market analyst at CMC Markets UK.

Brexit was also likely to be on investors’ minds after a vote in parliament to clear Prime Minister Theresa May to trigger Article 50 won 498 votes to 114. The bill will now have to pass through the House of Lords.

Investors were also be digesting the latest rate announcement from the Federal Reserve late on Wednesday. The bank kept its main policy settings unchanged, as it waited for greater clarity on the new administration's fiscal plans. Since its last meeting, activity in the jobs market had continued to strengthen and economic activity to expand at a moderate pace, the Fed said.

However, unlike at its previous meeting in mid-December, rate-setters pointed out how measures of consumer and business sentiment had improved of late.

Regarding prices, inflation was still below the Fed's 2.0% target, the Fed said, adding that "market-based measures of inflation compensation remain low."

"Near-term risks to the economic outlook appear roughly balanced," the Fed also reiterated in its statement.

Monetary policymakers in Washington DC thus kept the range for the Fed funds rate at between 0.50% and 0.75%, as expected.

In any case, market moves were likely to be restrained ahead of tomorrow´s monthly US jobs report.

Reckitt Benckiser goes shopping Stateside

In corporate news, consumer goods firm Reckitt Benckiser confirmed that it is “advanced negotiations” to buy US baby food maker Mead Johnson for around $16.7bn, a move which could bolster its health products business.

The Slough-based company which makes Durex, Nurofen, Cillit Bang and Dettol said that it is in talks to by each Mead Johnson share for $90 in cash giving it a share capital of about $16.7bn.

Oil giant Royal Dutch Shell reported an 8% drop in full-year profits on a current cost of supplies basis to reach $3.53bn, although net income attributable to shareholders was higher by 136% to $4.6bn.

On the other hand, fourth quarter CCS earnings excluding identified items on the other hand rose 14% to $1.8bn (consensus: $2.8bn), driving a rise in earnings per share of 27% to 19 cents.

Shell explained that CCS profits ex items took a $0.5bn hit from charges linked to deferred tax reassessments.

Telecoms giant Vodafone posted a trading update for the quarter to 31 December on Thursday, reporting 1.7% growth in group organic service revenue, with Europe accounting for 0.7% of that growth and Africa, Middle East and Asia-Pacific (AMAP) 3.9%.

The FTSE 100 firm said its European growth continued as average revenue per user (ARPU) stabilised, with Italy up 3.0%, Germany up 1.8%, Spain 0.8% firmer, and the UK falling 3.2%.

AstraZeneca reported good growth in earnings for 2016 in spite of a 13% decline in revenues in the fourth quarter, as it holds out hopes that 2017 will be "a defining year" for new blockbuster drugs to breathe life back into the business.

The decline in revenue towards the end of the year led to annual turnover falling 7% to £23b, reflecting the rise of generic rivals to its Crestor, its last great blockbuster patent.

Market Movers

FTSE 100 (UKX) 7,122.05 0.20%
FTSE 250 (MCX) 18,251.17 0.06%
techMARK (TASX) 3,246.13 -0.00%

FTSE 100 - Risers

Reckitt Benckiser Group (RB.) 7,154.00p 4.74%
Compass Group (CPG) 1,434.00p 2.65%
Hikma Pharmaceuticals (HIK) 1,910.00p 1.60%
Fresnillo (FRES) 1,487.00p 1.43%
Royal Dutch Shell 'B' (RDSB) 2,254.50p 1.42%
Anglo American (AAL) 1,389.00p 1.28%
Royal Dutch Shell 'A' (RDSA) 2,164.00p 1.26%
Randgold Resources Ltd. (RRS) 6,690.00p 1.13%
Rolls-Royce Holdings (RR.) 675.00p 1.05%
Standard Chartered (STAN) 788.30p 1.04%

FTSE 100 - Fallers

Worldpay Group (WPG) 278.70p -3.13%
Vodafone Group (VOD) 190.45p -1.32%
International Consolidated Airlines Group SA (CDI) (IAG) 481.30p -1.09%
Aviva (AV.) 479.10p -1.05%
Royal Bank of Scotland Group (RBS) 221.90p -1.03%
Morrison (Wm) Supermarkets (MRW) 237.40p -0.92%
Land Securities Group (LAND) 993.00p -0.90%
Legal & General Group (LGEN) 233.60p -0.85%
Capita (CPI) 494.80p -0.84%
AstraZeneca (AZN) 4,213.50p -0.79%

FTSE 250 - Risers

GVC Holdings (GVC) 644.50p 4.63%
Grainger (GRI) 247.30p 3.95%
JRP Group (JRP) 150.40p 2.59%
Evraz (EVR) 241.20p 2.55%
Ascential (ASCL) 294.40p 2.05%
Rightmove (RMV) 4,120.00p 2.01%
Hochschild Mining (HOC) 245.50p 1.87%
Carillion (CLLN) 224.40p 1.68%
SSP Group (SSPG) 404.00p 1.66%
Wetherspoon (J.D.) (JDW) 958.50p 1.59%

FTSE 250 - Fallers

Mitchells & Butlers (MAB) 256.50p -5.49%
Nostrum Oil & Gas (NOG) 455.40p -4.31%
TalkTalk Telecom Group (TALK) 161.40p -4.16%
Aberdeen Asset Management (ADN) 248.90p -3.56%
Petra Diamonds Ltd.(DI) (PDL) 149.90p -1.90%
IP Group (IPO) 186.90p -1.79%
Ocado Group (OCDO) 238.70p -1.61%
Allied Minds (ALM) 384.00p -1.54%
Victrex plc (VCT) 1,874.00p -1.37%
TR Property Inv Trust (TRY) 284.00p -1.32%