16th Dec 2015 08:33
LONDON (Alliance News) - London shares opened higher Wednesday, with Dixons Carphone among the biggest gainers but with supermarkets firmly in the red, while the main event of the day will be the monetary policy decision by the US Federal Reserve, due after the European stock market close.
The FTSE 100 index was up 0.4% at 6,043.88 points, the FTSE 250 was up 0.3% at 17,048.26 and the AIM All-Share was up 0.3% at 721.87.
The FTSE 100 and the FTSE 250 both closed higher on Tuesday following eight consecutive sessions finishing in the red, helped by a recovery in oil prices after hitting fresh seven-year lows on Monday.
Shortly after the London open, Brent was still firm in its recovery, priced at USD38.14 a barrel. Brent had been at USD38.50 a barrel at the London close Tuesday, after touching a low of USD36.32 a barrel on Monday. Meanwhile, West Texas Intermediate was at USD36.77 a barrel after the open compared to its Monday low of USD34.51 a barrel.
Oil stocks were adding to the gains seen on Tuesday, with BP up 1.2%, Royal Dutch Shell 'A' shares up 0.6% and BG Group up 0.4%.
Pearson's previously downtrodden shares led gainers, up 5.1%.
Meanwhile, Dixons Carphone was up 2.1% after the electricals and mobile phone retailer said its pretax profit rose in the first half thanks to higher revenue and solid like-for-like sales growth, as it added two notable names to its board.
The company, created by the merger of Dixons Retail and Carphone Warehouse last year, said its pro-forma headline pretax profit for the 26 weeks to the end of October was GBP121.0 million, up 23% year-on-year from the GBP98.0 million it made a year earlier. The headline result strips out costs from the merger.
Reported pretax profit for the half rose to GBP78.0 million from GBP71.0 million, despite the group booking more charges related to the integration of the two businesses. The company said it will pay an interim dividend of 3.25 pence per share, up 30% year-on-year.
BHP Billion gained 1.8% after Credit Suisse upgraded the miner to Outperform from Neutral, according to traders.
Supermarkets were giving back some of the gains seen on Tuesday after the latest UK market share data from Kantar. J Sainsbury was down 1.3%, Wm Morrison Supermarkets down 1.7% and Tesco down 1.6%.
Anglo American was down 0.7% after Societe Generale downgraded the miner to Sell from Hold.
The CAC 40 in Paris opened up 0.1% while the DAX 30 in Frankfurt was up 0.2%.
Oanda analyst Craig Erlam said he expects the UK unemployment rate, due at 0930 GMT, "to show unemployment remaining at 5.3%, while earnings growth is expected to have cooled slightly in October to a still very reasonable, particularly in this low inflation environment, 2.5%."
Also in the economic calendar, together with PMI readings, the eurozone consumer price index is at 1000 GMT. In the US, apart from the Fed monetary policy decision, building permits and housing starts data are due at 1330 GMT, while EIA crude oil stocks are expected at 1530 GMT.
In Asia on Wednesday, the Japanese Nikkei 225 index closed up 2.6%. In China, the Shanghai Composite ended up 0.2%, while the Hang Seng index in Hong Kong ended up 2.1%.
Wall Street ended higher on Tuesday, with the DJIA and the Nasdaq Composite up 0.9% and the S&P 500 index up 1.1%. US investors were looking to the Fed's two-day monetary policy meeting, started on Tuesday, which outcome is due to be released at 1900 GMT with the policy decision, while Yellen's press conference will follow at 1930 GMT.
The meeting is widely expected to bring the first US interest rate hike in almost 10 years. The last time the Fed increased rates was in June 2006.
Economic data from the US, particularly labour statistics, have continued to strengthen since the Fed's last meeting in October, while comments from Fed Chair Janet Yellen and other members of the Federal Open Market Committee remained supportive of a 25 basis point rate hike to take Fed Funds rate to 0.25%-0.50%.
FxPro chief economist Simon Smith said the Fed has done "so much" to prepare markets for the eventuality that not moving would probably be more damaging for markets and definitely more damaging for the US central bank's credibility.
"If there are any doubts on their part, it would likely be expressed by a move in the target rates by less than the anticipated 25 basis points," added Smith. "The other factor likely to impact on the dollar is the tone of the press conference and accompanying statement in terms of what indications are given as to the course of policy in 2016."
"On balance, we see the Fed moving rates and moderating the impact on the dollar with a relatively dovish statement," Smith noted.
By Daniel Ruiz; [email protected]
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