London midday: FTSE flat as traders await BoE's interest rate decision
The FTSE 100 was flat at midday on Tuesday as investors looked ahead to the Bank of England’s policy meeting later in the week.
The BoE is expected to cut interest rates at Thursday’s policy meeting to prevent an economic fallout from Britain’s vote to leave the European Union.
Bank of America Merrill Lynch said the central bank is likely to cut rates by at least 25 basis points. “Rate setters have already recognised Brexit as a bad economic shock. Plenty of data confirm that view. Mark Carney said easing would probably be required. Even if no data were available, we believe the right action would be to cut: just in case.”
Ahead of Thursday’s policy announcement, Carney was forced to defend the BoE’s role in the EU referendum on claims of peddling phony forecasts and scare stories that undermined the Bank’s independence.
Speaking to lawmakers on Tuesday in Parliament, Carney also said he did not decide in advance what action the Bank should take on Brexit.
In May Carney was criticised by Leave supporters in the EU referendum after saying there was a chance of a recession.
Minutes of the BoE’s last Financial Policy Committee meetings on 28 June and 1 July were also released on Tuesday. The minutes showed that the Committee had reviewed the sharp moves in the market following the Brexit vote along with recent economic data before deciding to reduce the UK countercyclical capital buffer rate from 0.5% to 0% of banks’ UK exposures.
Elsewhere, German inflation improved in line with forecasts in June but remained well below the European Central Bank’s target of just below 2%, official data showed on Tuesday.
The consumer price index, on a harmonised basis or HICP, rose 0.1% on the month and by 0.2% on the year, according to the final estimate by Destatis - which was unchanged from the previous estimate. In May HICP inflation grew 0.4% on the month and was unchanged on the year.
Still to come, Federal Reserve policymakers Daniel Tarullo and James Bullard speak at 1415 BST in Washington and 1435 BST in St. Louis, respectively. Data on US wholesale inventories is due at 1500 BST along with the JOLTS Job Openings report at 1500 BST.
Meanwhile, oil prices rebounded from two-month lows, supported by a weaker dollar. Brent crude rose 2.3% to $47.37 per barrel and West Texas Intermediate increased 2.0% to $45.69 per barrel at 1158 BST.
In company news, Shire led the blue chip risers after the US Food and Drug Administration approved its lifitegrast eye drops for treating signs and symptoms of dry eye disease. Lifitegrast, to be sold under the Xiidra name, is expected to launch in the third quarter.
Online fashion retailer ASOS gained as it reported a 30% rise in total sales for the four months to 30 June to £500.5m and said it expects full-year sales growth to be at the upper end of the 20-25% range. Total retail sales beat analysts’ expectations of around 23% growth.
Astrazeneca edged higher amid reports that it is considering making a bid for US drug outfit Medivation.
Market Movers
FTSE 100 (UKX) 6,681.10 -0.03%
FTSE 250 (MCX) 16,850.89 0.86%
techMARK (TASX) 3,301.90 -0.38%
FTSE 100 - Risers
Aviva (AV.) 382.20p 4.34%
St James's Place (STJ) 823.50p 4.31%
Lloyds Banking Group (LLOY) 57.03p 3.97%
Barclays (BARC) 150.90p 3.78%
Barratt Developments (BDEV) 416.10p 3.51%
Dixons Carphone (DC.) 329.40p 3.20%
Shire Plc (SHP) 4,967.00p 3.09%
Legal & General Group (LGEN) 189.10p 3.00%
International Consolidated Airlines Group SA (CDI) (IAG) 401.70p 2.95%
Standard Life (SL.) 284.30p 2.90%
FTSE 100 - Fallers
Randgold Resources Ltd. (RRS) 9,300.00p -2.36%
Fresnillo (FRES) 1,939.00p -2.27%
AstraZeneca (AZN) 4,461.00p -2.09%
Reckitt Benckiser Group (RB.) 7,535.00p -2.04%
Hikma Pharmaceuticals (HIK) 2,547.00p -2.04%
GlaxoSmithKline (GSK) 1,630.50p -1.92%
Mediclinic International (MDC) 1,095.00p -1.88%
Diageo (DGE) 2,123.50p -1.76%
Vodafone Group (VOD) 226.40p -1.57%
British American Tobacco (BATS) 4,842.50p -1.57%
FTSE 250 - Risers
Rathbone Brothers (RAT) 1,910.00p 10.85%
Evraz (EVR) 157.30p 7.67%
Aldermore Group (ALD) 137.80p 6.99%
Keller Group (KLR) 1,001.00p 6.94%
St. Modwen Properties (SMP) 270.70p 6.91%
Marshalls (MSLH) 262.40p 6.41%
Shawbrook Group (SHAW) 162.80p 6.27%
Brown (N.) Group (BWNG) 185.70p 5.99%
Galliford Try (GFRD) 933.50p 5.84%
IP Group (IPO) 169.40p 5.28%
FTSE 250 - Fallers
NMC Health (NMC) 1,115.00p -10.73%
Centamin (DI) (CEY) 159.10p -5.63%
Acacia Mining (ACA) 539.00p -3.66%
Rotork (ROR) 212.40p -2.84%
Ted Baker (TED) 2,250.00p -2.47%
Rentokil Initial (RTO) 205.40p -2.28%
Hochschild Mining (HOC) 238.00p -2.26%
Tate & Lyle (TATE) 693.00p -2.19%
Card Factory (CARD) 313.30p -2.09%
UK Commercial Property Trust (UKCM) 77.05p -1.97%