12th Nov 2014 07:40
LONDON (Alliance News) - UK shares are set to open lower Wednesday, with downbeat sentiment affecting financial services after regulators in the US, UK and Switzerland hit five banks with more than USD3.2 billion in fines over foreign exchange failings and attempted manipulation of foreign exchange benchmark rates.
Futures indicate the FTSE 100 to open 11 points lower at 6,618.6, ending a five-day bull run. The focus later in the day is set to be on UK unemployment and wages data and the Bank of England inflation report, as well as the latest EU industrial production numbers for September. The index closed Tuesday at 6,627.4.
Germany's DAX closed up 0.2% while the CAC 40 finished down 0.5% in quiet trade on Armistice Day.
The Bank of England publishes its quarterly inflation report at 1030 GMT and gives an assessment of the prospects for UK inflation over the next two years. Expectations of a rate rise in the UK have been slowly pushed back from early 2015 towards a date beyond next year?s General election date in May as the problems continue to stifle economic activity across Europe.
Also expected is UK unemployment data at 0930 GMT, with consensus forecasts indicating a drop to 5.9% in the three months to September, which would mean the lowest rate since November 2008 when the UK was deep in the throes of the financial crisis.
The UK's Financial Conduct Authority imposed fines amounting to USD1.7 billion on the five banks, including HSBC and Royal Bank of Scotland, saying the banks failed to control business practices in their G10 spot foreign exchange trading operations, while the US Commodity Futures Trading Commission ordered the banks to pay more than USD1.4 billion in penalties.
The FCA fined Citibank USD358 million, HSBC USD343 million, JPMorgan Chase USD352 million, Royal Bank of Scotland USD344 million and UBS USD371 million. The CFTC imposed fines of USD310 million each on Citibank and JPMorgan, USD290 million each for RBS and UBS, and USD275 million for HSBC.
Barclays, which last month set aside GBP500 million in provisions, is yet to be fined. The FCA said it will continue its investigation.
Luxury fashion retailer Burberry reported a 14% rise in underlying revenue of GBP1.1 billion but said it expects some pressure on the full-year margin, a reflection of the strong pound, a more difficult external environment and continued investments.
J Sainsbury said it swung to a pretax loss in the first half of the year, and outlined its plans to cuts costs and capital expenditure. The supermarket operator reported a loss of GBP290 million for the 28 weeks to September 27 from a profit of GBP433 million in the same period a year earlier. First-half revenue fell 0.1% to GBP12.67 billion.
Security company G4S said organic revenue rose 4.2% in the first nine months of the year and it has agreed new contracts with annual revenues of over GBP870 million and total contract value of GBP1.7 billion. Contract retention for the nine months was similar to historical levels, at slightly above 90%, the company said.
Tullow Oil said it is reviewing its capital expenditure and costs, noting overall exploration spending will be significantly reduced and will be focused primarily on East Africa where it has major basin-opening potential.
Housebuilder Barratt Developments said market conditions remain robust across all regions of the country and said it remains on track to deliver its target of 15,000 completions for the full year.
US trading finished mixed Tuesday. The DJIA closed flat on the day, the S&P 500 ended up 0.1% and the Nasdaq Composite closed down 0.2%.
In Asia, the Japanese Nikkei closed up 0.4% Wednesday, its highest level in seven years. The Hang Seng is 0.7% higher and the Shanghai Composite is up 1.0%.
By Ian Edmondson; [email protected]
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