UK stocks ended flat on Wednesday as jitters ahead of the Federal reserve’s rate decision set in.
The boost to London stocks from inflationary boosting measures from the Bank of Japan were as defined and immediate at the opening as they were short—lived. The FTSE 100 index, spent the rest of the session sliding back towards unchanged and ended up 0.06%, or 4 points, at 6,834.
The Fed is the key story for markets globally, and London’s bourse was no exception.
Although some banks, such as Goldman Sachs, are attributing no more than a 5% chance of a rate hike from the Fed at 1800 GMT, it is what comes in the accompanying statement that has markets on edge. Will rates go up in 2016 is what everyone wants to know. Or has a bout of mixed data put paid to that ambition.
Initially, shares in banks and insurance companies helped to lift the market after the latest moves from the Bank of Japan.
Japan's central bank announced changes to its monetary policy, including targeting yield rates on government bonds - a measure that is seen as beneficial for financial firms.
Barclays (LON:BARC) shares rose 3.1% to 171.6p and was the fourth biggest riser. As well as the reaction to the Bank of Japan's actions, Barclays' shares were boosted after analysts at HSBC raised their rating on the British bank to "buy" from "hold".
The top riser was Legal & General (LON:GEN) up 3.7% to 22.6p, while Aviva (LON:AV.) and Standard Life (LON:SL.) were also top-10 risers.
In the mid-caps, the FTSE 250 ended up 0.2% at 17,933 and led by AO World (LON:AO.) up 5.3% to 165.8p.
Ocado Group (LON:OCDO) was the mid-caps biggest loser of 5.3% to 254.5p after brokers at Deutsche Bank downgraded their rating on the stock to 'sell' from 'hold' and reiterated a target price of 220p after the online supermarket issued a cautious outlook on margins. Ocado last Tuesday warned that the supermarket price war has been eating into profit margins as it reported its third quarter trading update.
Shares in Majestic Wine (LON:WINE) dived by 24% to 330p after it issued a profit warning. Majestic said profits would be lower than expected after a direct marketing campaign in the US failed to work, while profit margins had declined at its commercial business - which supplies wines to pubs and restaurants.
Shares in womenswear retailer Bonmarche (LON:BON) sank by 21.7% to 90p after it also issued a profit warning. The company said it had suffered from "extremely poor" sales of its autumn range in September because of the recent hot weather.
Smaller stocks bruised most easily on Wednesday. The FTSE AIM 100 Index ended down 0.7% at 3,871 while the FTSE AIM All-Share Index slid 0.4% to 811.
London stocks gaining matched those who were unchanged at 36% apiece while losers were in the minority of 28%.
LUNCH
FTSE 100 was heading higher at midday as traders mulled the Bank of Japan move and look to the US Fed, which will report later.
The BoJ kept its interest rate on hold and continues it QE programme, adding it would aim to keep yields on 10-year government bonds at around 0%.
Analysts said it reafirmed the idea, weakening recently, that Central Banks still have some bite and hold over world economies.
In London, FTSE 100 was up over 24, at 6,857 while banks and insurers appeared to be reaping the rewards. Barclays PLC (LON:BARC) was top dog up over 3.7% to 172.7p, while Legal and General plc (LON:LGEN) added 3.04% to 221.24p.
Top London riser was media and tech group Milestone plc (LON:MILE), which added 100% to 1p, as it said that its Nexstar joint venture with Black Cactus was now distributing independent film and video to the Amazon Prime global streaming service.
Cloudtag Inc (LON:CTAG), was a big gainer today, as it told investors it has hired Yuval Lange as the company’s new chief business development officer.
The wearable technology firm, which is developing personal monitoring products focused on fitness and health, highlighted that Lange’s appointment is part of a process to build a highly reputable in-house management team.
Shares pumped up 14.29% to stand at 14p each.
Meanwhile, Fitbug Holdings PLC (LON:FITB) added over 31% to 0.34p as it it halved the pre-tax loss in the first half, as its turnaround strategy launched in the second half took hold.
Greatland Gold (LON:GGP) was also up, 9.09% higher at 0.18p. Yesterday, the mining group reported anomalous levels of metal typical of a polymetallic VMS-type system at its Bromus project in Western Australia.
Notable grades of silver, zinc, cadmium and sulphur were unearthed with low level nickel intercepts as well.
FTSE 100 still higher at lunch
FTSE 100 was higher at lunch, with financial stocks gaining after the BoJ announcement.
The blue chip benchmark is up around 26 at the time of writing at 6,854.
The biggest riser is banking titan Barclays (LON:BARC), up 3.72% to 172.65p.
OPEN
FTSE 100 was heading higher at the open, as small caps went south, as the Bank of Japan announced policies in a bid to stimulate growth.
It comes as the Fed in the US is due to report on its monetary policy later.
The Japan central bank kept interest rates on hold, but said it would aim to keep yields on 10-year government bonds at the current zero percent.
FTSE 100 is up 34.77 at 6,865, while the FTSE AIM All share is down 0.33% to 811.860. The index of the biggest juniors FTSE AIM 100 is down 0.59% to 3,874.
Barclays (LON:BARC) is the Footsie's biggest riser, up 3.21% to 171.80p, while analytics group Relx plc is down 1.43% to 1,447p, making it the biggest loser.
Another big laggard was wine merchant Majestic Wine PLC (LON:WINE) which dripped over 26% lower at 319.50p.
It blamed weak on-trade business and the failure of a US direct mail campaign for a profit warning.
The group forecast pre-tax earnings before interest in the current financial year to April 2017 will fall short of market expectations of £16.1mln.
Meanwhile, discount womenswear chain Bonmarché Holdings PLC (LON:BON) plummeted over 24% to 86.50p after it sounded the earnings alarm.
Trading in September was described as “extremely poor”. As a result underlying sales for the second-quarter of the financial year were down 8%, as were like-for-like revenues for the first half of the firm’s financial year.
On the upside for small caps, IronRidge Resources (LON:IRR) added almost 13% to 12p a pop as it revealed it was ready seal the deal for a major new gold discovery in Chad.
Having signed an exclusive option with Tekton Minerals in the summer the company told investors that the deal was now unconditional.
The AIM quoted explorer will now proceed with a US$3.5mln investment to acquire up to 58% of Tekton’s equity.
Chaarat Gold (LON:CGH) was another notable gainer, with shares adding 7.13% to stand at 6.31p, recouping losses seen yesterday, when it reported the largest shareholder in Chaarat Gold Holdings was to join the board of the company as non-executive chairman.
The appointment of Martin Andersson, who holds his Charaat stake through Labro Investments, coincided with a refreshed statement of the planned path to production for the company’s flagship Tulkubash project in Kyrgyzstan.
FTSE 100 up 35 as Bank of Japan commits
FTSE 100 surged higher as investors took heart from the Bank of Japan's commitment to an open cheque book seemingly forever.
The London index rose 35 points to 6,866.
Risers included all of the big banks led by Barclays (LON:BARC) up 4% to 172.9p and Lloyds Banking (LON:LLOY) with a gain of 2.6% to 57.9p.
Majestic Wine PLC (LON:WINE) was a heavy faller with a profit warning sending the drinks retailer crashing by more than a quarter.
Bonmarche was another retail casualty as hot weather hit clothing sales sending its shares down 22%.
London’s FTSE 100 is expected to start Wednesday is positive territory, extending this week’s winning streak, though attentions aren’t far from Central Bank machinations.
The Bank of Japan has today decided to leave rates unchanged - already at 0.1% there’s not much wiggle room - but, boosted markets with some other manoeuvres.
It will now focus on ‘yield curve control’ over the long term, rather than have targets measured against the base interest rate itself. This has a stimulus element, whereby the BoJ will purchase long-term government bonds so that yields stay around current levels of zero percent.
With the Nikkei rising just over 1.5%, to 16,743, traders welcomed the news.
Many more eyes will be on the US Federal Reserve later today, indeed the American policy meeting has been the subject of speculation and anticipation for a number of days.
The big question is whether the central bankers will think the US economy has recovered sufficiently for interest rates to rise for the second time in the past nine months.
“If the narrative of the last few weeks has been any sort of guide it is clear that the FOMC is split down the middle as to whether rates should be raised, and it is highly likely that whatever decision is arrived at there will probably be some dissent, “said Michael Hewson, analyst at CMC Markets.
On the fence, Wall Street benchmarks barely moved on Tuesday with the Dow Jones and S&P 500 closing just 0.05% and 0.03% higher for the trading day, closing at 18,128 and 2,138 respectively.
The Nasdaq index, meanwhile, was only slightly more active as it added 0.12% to end the session at 5,241.
In London, CFD and financial spreadbetting group IG Markets predicts a similar start to trading.
It sees the FTSE 100 up around 15 points, calling the benchmark at 6,848 to 6,852 about an hour before the start of Wednesday’s session.