22nd Aug 2019 08:50
(Alliance News) - London stocks opened Thursday's session on a downbeat note after a set of less dovish than expected minutes from the US Federal Reserve.
The FTSE 100 was lower in early trade despite NMC Health shares shooting up more than 30% on a Reuters report that two groups have bid for a substantial minority stake in the firm.
The FTSE 100 was down 29.03 points, or 0.4%, at 7,174.94. The FTSE 250 was down 50.18 points, or 0.3%, at 19,157.57 and the AIM All-Share was down 0.2% at 869.85.
The Cboe UK 100 index was down 0.4% at 12,156.03. The Cboe UK 250 was down 0.2% at 17,039.57 and the Cboe UK Small Companies was flat at 10,873.99.
In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were both 0.5% lower in opening trade.
"Traders over in Europe are a little disappointed on the back of the Fed minutes and this is pushing the stocks lower today," said Naeem Aslam at ThinkMarkets.
Although the minutes of the Fed's policy meeting late last month showed officials were primarily focused on the risks to the US economy, amid fears about the blowback from President Donald Trump's trade war with Beijing, they stressed that they would keep their options open on their next steps.
After the Fed cut the benchmark interest rate for the first time in more than a decade, the fact that officials highlighted the importance of maintaining "optionality" may unsettle financial markets that have been counting on another rate cut in September.
"The Fed minutes didn't show that the Fed is going to adopt an aggressive path in relation to cutting interest rates. The view about cutting the interest rates during the next month was diverse among the members. Looking at the minutes, it appears that the Fed's base case scenario in relation to the trade war (between the US and China) is still based on a deal," Aslam observed.
He continued: "So the question is what could be coming out of the Jackson Hole which can either support the markets or break the stock rally altogether? Speculations are that Jerome Powell is going to show his flexible side: meaning, a message which will say that we are open to adopt an act as per the market conditions."
The Jackson Hole symposium of central bankers kicks off on Thursday. Fed Chair Powell is due to speak on Friday. And, in another central banking event this week, the European Central Bank's minutes from July's meeting will be released at 1230 BST on Thursday.
The economic events calendar elsewhere has PMI readings from eurozone at 0900 BST and the US at 1445 BST.
Already released, data showed Japan's manufacturing sector remained in contraction territory in August.
The flash Manufacturing PMI edged up to 49.5 in August from 49.4 in July, remaining below the no-change mark of 50. The composite PMI, meanwhile, rose to 51.7 from 50.6.
Meanwhile, in Germany, IHS Markit said the economy "continued to underperform" in August. The composite PMI came in at 51.4, up from 50.9 in July, as the manufacturing sector recorded a slower pace of contraction with a reading of 43.6 from 43.2 in July.
In Asia on Thursday, the Japanese Nikkei 225 index closed up 0.1%. In China, the Shanghai Composite is down 0.1%, while the Hang Seng index in Hong Kong is 0.9% lower.
London's FTSE 100 was lower in early trade despite NMC Health shooting up 32% after Reuters reported two groups, including one backed by China's Fosun, have bid for a 40% stake in the FTSE 100-listed healthcare provider.
In addition, NMC on Thursday backed its annual guidance after a solid first half.
Revenue for the first half of 2019 rose to USD1.24 billion from USD932.0 million, with pretax profit rising to USD140.6 million from USD118.7 million.
NMC said it continues to view the future "with confidence" and reiterated its annual guidance.
"Given the company's strong operational and financial performance and continued trend of performing in line with expectations, management remains highly confident in relation to future performance. Looking ahead, the board intends to continue its successful growth strategy, which it believes will continue to create significant value for shareholders over the long-term," NMC said.
Separately, NMC said it intends to launch a USD200 million share buyback programme.
Online grocer Ocado shed 2.9% after reporting a "small fire" at its automated warehouse in Erith, south-east London.
The fire occurred "just outside" the building and has now been extinguished. No part of the material handling equipment was involved, Ocado stressed.
"The fire suppression measures in place performed as intended and the fire did not spread," said Ocado.
The firm said there was some disruption to picking, and some customer orders have been cancelled.
Antofagasta was down 1.3% after cautioning on the impact trade issues are having on the copper market.
Chilean copper miner Antofagasta reported revenue of USD2.53 billion for the six months to June-end, 19% higher than the year before due to higher copper sales, despite a 6.3% dip in the copper price.
Earnings before interest, taxes, depreciation, and amortisation climbed 44% to USD1.31 billion, with the Ebitda margin up to 51.7% from 42.6% due to costs falling.
Looking ahead, Antofagasta said uncertainty caused by trade issues between the US and China has "had a significant negative impact of market sentiment and the copper price".
In the FTSE 250, iron ore pellet producer Ferrexpo was down 7.1% after Liberum cut the stock to Sell from Buy.
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