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London open: Stocks nudge lower after Fed; BoE announcement eyed
London stocks slipped in early trade on Thursday as investors digested a hawkish rate cut from the US Federal Reserve and looked ahead to a policy announcement from the Bank of England.
At 0830 BST, the FTSE 100 was off 0.1% at 7,306.27, while the pound was down 0.1% against the dollar and the euro at 1.2466 and 1.1294, respectively.
The Fed cut rates by 25 basis points on Wednesday, as expected, but cast doubt on any future easing.
Spreadex analyst Connor Campbell said: “There was a familiar sense of post-Fed deflation on Thursday. No major losses, but rather a low level feeling of disappointment.
“As expected, the Federal Reserve cut interest rates for a second time this year – and decade – taking them a quarter of a point lower to 1.75-2%. However, that was the least interesting thing about Wednesday’s statement.
“Hinting at an uncertain path going forwards, the FOMC was pretty split about what to do this month: seven members backed the cut, with two voting in favour of holding steady, and one keen for a deeper 50 basis points reduction. Needless to say, Donald Trump wasn’t happy.
“The meekness of the move sapped some energy from the global markets.”
With the Fed decision out of the way, attention will turn to the Bank of England rate announcement at 1200 BST amid expectations of no change to policy. Investors will be looking to see how the central bank expects the UK economy to fare over the next few months.
On the data front, UK retail sales figures for August are due out at 0930 BST.
In equity markets, drinks company Diageo was in the red after saying it had started the year well but warning that it was not immune to shifting global trade conditions.
Sugar and sweeteners group Tate & Lyle ticked lower as it said it had agreed a £930m bulk annuity insurance ‘buy-in’ with Legal & General. The de-risking of the scheme means the company will save £20m in annual contributions, said Tate & Lyle chief financial officer Imran Nawaz.
Footwear and sports apparel retailer JD Sports Fashion lost ground after the Competition and Markets Authority said it was referring the company’s proposed acquisition of rival Footasylum for a phase 2 investigation as it may hurt competition on the high street.
There were no ex-dividend stocks on the FTSE 100, but on the 250, Drax, Bakkavor, BCA Marketplace, Crest Nicholson, Dunelm, Equiniti, Petrofac, International Public Partnerships, Playtech, Rank, Redrow, Sanne, Sophos and Unite were all in the frame, knocking 19 points off overall.
Going the other way, British Gas owner Centrica was the top riser on the FTSE 100 after an upgrade to ‘buy’ at Jefferies.
Shares of online trading platform IG Group rallied as it reported flat first-quarter revenues, said it performed well and backed its expectations for a return to revenue growth in FY20.
Shore Capital said steady revenues are “a good outcome given the same period last year included two months of trading before ESMA’s leverage restrictions were applied”.
