19th Dec 2019 08:38
(Alliance News) - London stocks were tepid at the open on Thursday, with the FTSE 100 marginally higher and the pound firm ahead of the latest Bank of England interest rate decision.
"It's shaping up to be another relatively flat session, with investors already in full holiday mode ahead of the festive break," said Craig Erlam at Oanda.
The FTSE 100 index was up just 1.54 points at 7,542.29 early Thursday. The mid-cap FTSE 250 index was down 3.76 points at 21,659.37. The AIM All-Share index was flat at 934.86.
The Cboe UK 100 index was down 0.2% at 12,781.26. The Cboe 250 was down 0.1% at 19,563.74, and the Cboe Small Companies flat at 11,951.91.
In mainland Europe, the CAC 40 in Paris was up 0.2% and the DAX 30 in Frankfurt also 0.2% higher.
In Asia on Thursday, the Japanese Nikkei 225 index ended down 0.3%. In China, the Shanghai Composite closed flat, while the Hang Seng index in Hong Kong closed down 0.4%.
In forex, the euro was quoted at USD1.1128 early Thursday, firm compared to USD1.1125 late Wednesday. Against the yen, the dollar was quoted at JPY109.58 versus JPY109.52.
"President Trump's impeachment process has had and should continue to have little impact on USD. While impeached in the House, the Republican-held Senate is unlikely to remove the President from office," said ING.
US President Donald Trump was impeached for abuse of power in a historic vote in the House of Representatives on Wednesday, setting up a Senate trial on removing him from office after three turbulent years.
By a 230 to 197 vote in the Democratic-majority House, the 45th US president became just the third occupant of the White House in American history to be impeached.
Trump will now stand trial in the Senate, where his fellow Republicans hold a solid majority and are expected to exonerate him.
In commodities, gold was quoted at USD1,475.30 early Thursday, flat on USD1,475.70 at the London equities close on Wednesday. Brent oil was quoted at USD66.15 early Thursday, flat on USD66.12 at the London equities close on Wednesday.
In a quiet day for London, TUI was down 2.1% after Berenberg cut the Anglo-German travel operator to Hold from Buy.
"In our view, TUI is making a strategic error in pursuing further avenues of growth rather than focus on its vertically integrated offering following the investments in hotels and cruises," said Berenberg.
FTSE 250 constituent Capita was down 4.2% after Deutsche Bank reduced the outsourcer to Sell from Hold.
Engineer Weir, down 2.7%, was downgraded to Neutral from Outperform.
Circassia Pharmaceuticals slumped 11% after it said BeyondAir has terminated a licensing agreement agreement for "material breach". The deal between the two companies is for the commercial rights to the late-stage ventilator-compatible nitric oxide product LungFit PH in the US and China.
"Circassia refutes the allegations in the strongest terms and believes there are no grounds to terminate the agreement. The company will enforce its rights under the agreement and defend its position vigorously," the respiratory disease-focused biopharmaceutical company said.
The economic events calendar on Thursday has UK retail sales figures at 0930 GMT and US current account numbers at 1330 GMT.
Elsewhere in the UK is the Queen's Speech, due around 1130 GMT, which will include the Withdrawal Agreement Bill to exit the EU, expected to be voted on on Friday.
Then, at midday, is the Bank of England's latest interest rate decision, though no change is expected.
"The realisation is increasingly taking hold amongst MPC members that even an island is not isolated from what the economy in the rest of the world is doing. The fact that the British PMI is in free fall is only partially due to the Brexit chaos. An increasing number of MPC members understand that," said Commerzbank analyst Ulrich Leuchtmann.
He continued: "I understand that it is difficult to admit one's own mistakes. But waiting is no good. The British central bankers will have to admit sooner or later that their cautious attempt of a normalisation was a failure. That is not going to happen in one go today. But if a third member were to cave in today at least that would make it clear for everyone that this process is taking place."
At the BoE's last meeting, in November, two members voted for a rate cut, while the majority, being the remaining seven, opted to keep Bank Rate at 0.75%.
Sterling was quoted at USD1.3125 early Thursday, up from USD1.3070 at the London equities close on Wednesday.
Ahead of the communication of the latest rate decision, a Times newspaper investigation revealed a back-up communications system installed by the Bank a few years ago had been hijacked and shared with a market news service.
Having access to the Bank of England Governor Mark Carney's comments even seconds ahead of a rival would give traders a vital competitive advantage.
The BoE called the use of the audio feed "wholly unacceptable", and said it immediately disabled the third-party supplier's access.
According to the Times, those who subscribed to the market news service offering the Bank's audio had a five to eight-second head start over competitors.
Thursday's BoE decision comes after Japan's central bank decided on Thursday to keep in place its ultra-loose monetary policy to overcome deflation and prop up the nation's economy despite signs of a slowdown after a consumption tax hike.
The central bank decided to maintain the short-term interest rate at minus 0.1% and the long-term interest rates at around zero per cent, it said after a two-day monetary policy meeting. The bank will also continue large-scale asset purchases, it said in a statement.
The government raised the nation's consumption tax from 8% to 10% on October 1 despite sluggish consumer spending.
By Lucy Heming; [email protected]
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