21st Jan 2015 10:52
LONDON (Alliance News) - London share prices are in positive territory mid-morning Wednesday, building on four days of gains as minutes from the Bank of England's latest policy meeting showed a surprise unanimous decision to keep rates on hold and UK unemployment fell more than expected.
The FTSE 100 is 0.6% higher at 6,659, up from Tuesday's close of 6,620.1. The FTSE 250 is up 0.2% at 16,150.48, but the AIM All-Share index is down 0.2% at 697.53
Policymakers of the Bank of England unanimously decided to leave the key rate unchanged, voting in unison for the first time in six months. The Monetary Policy Committee voted 9-0 to retain the base rate at 0.50% and to maintain the size of asset purchases at GBP375 billion, minutes from the meeting showed Wednesday. Previously, the MPC had been split 7-2 in favour of keeping rates unchanged and unanimous on maintaining asset purchases.
The UK unemployment rate fell more than expected in the September to November period, dropping to 5.8% during the September to November period from 6% in the June to August period. Economists had forecast a rate of 5.9%.
During September to November, there were 1.914 million unemployed people compared with the 1.972 million people in the June to August period. Average earnings rose 1.7% annually after the 1.4% increase in October, in line with the consensus estimate.
"UK wages have continued on an upward spiral and, combined with low inflation, provide another boost to Britain?s workers, said Dennis de Jong at UFX.com. ?The figures will be seized upon by the government as evidence the UK economy is in far better shape than its European counterparts, and indeed other global heavyweights."
Germany's DAX 30 is down 0.2% and France's CAC 40 is 0.3% lower.
In Asia, the Bank of Japan kept its monetary policy unchanged and lowered its near-term inflation forecast as falling oil prices hamper efforts to lift inflation. At the monetary policy meeting on Wednesday, the policy board of the central bank decided by an 8-1 vote to maintain its target of raising the monetary base at an annual pace of about JPY80 trillion.
Citing lower crude oil prices, the BoJ downgraded its core inflation estimate for fiscal 2015 to 1% from 1.7%. But the central bank lifted the forecast for fiscal 2016 to 2.2% from 2.1%.
Japan's Nikkei closed down 0.5% at 17,515.23. The Hang Seng in Hong Kong closed up 1.7% at 23,352.58, and the Shanghai Composite finished 4.7% higher at 3,323.611.
Wall Street is set for a slow start, with futures indicating a 0.1% drop in the DJIA and no change for the S&P 500 and Nasdaq 100. US mortgage applications to January 16 and housing starts in December are due in the afternoon session, and American Express, eBay, and United Rentals report earnings after the close of US markets.
"For now, markets are likely to remain preoccupied by the fall in oil prices and the associated weakness of headline inflation," Lloyds Bank says in a note.
Brent crude is quoted at around USD48.85 a barrel Wednesday, up from last week's low of USD45.16, and US benchmark West Texas Intermediate is quoted at USD46.96 a barrel. Gold is hovering around the psychologically important USD1,300 level as wary investors seek safe havens. Mid-morning Wednesday it is quoted at USD1,299.41 an ounce.
"Increased safe haven demand has been the primary reason for the upsurge in gold prices, owing in part to the on-going troubles in eastern Ukraine, political uncertainty in Greece, and heightened risks of terrorist attacks," says Fawad Razaqzada at Forex.com.
In UK corporate news, shares in SABMiller are up 1.9% after the brewer said net producer revenue per hectolitre grew in all regions, as it continued to sell a greater proportion of its premium lagers and drinks. Still, it said difficult trading conditions, particularly in China, held back the company's performance in the three months to December 31, with net producer revenue rising 4%. In China, revenue fell 7% driven by a volume decline of 9%, with double-digit declines in the northeast and central provinces, the company said.
Publisher Pearson is up 4.7% after reporting that it expects 2014 results to be in line with its previous guidance, anticipating an adjusted operating profit of GBP720 million and adjusted earnings per share at the upper end of its guidance range at 66 pence.
Sports Direct International is down 4.6% after majority owner Mike Ashley sold 15.4 million shares, raising GBP110.9 million.
FirstGroup shares rose 4.3% after it said its overall trading is meeting its expectations, with weakness in its US Greyhound bus operations offset by growth in UK Rail and US First Transit.
By Ian Edmondson; [email protected]
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