18th Mar 2015 10:45
LONDON (Alliance News) - London shares are trading higher Wednesday, with Standard Chartered shares leading the FTSE 100, as the pound trades at fresh lows after the Bank of England's meeting minutes showed a unanimous decision to keep interest rates on hold in March.
The FTSE 100 is up 0.6% mid-morning at 6,877.19, while the FTSE 250 is up 0.5% at 17,281.37. The AIM All-Share index is up 0.3% at 717.38.
Standard Chartered is the biggest gainer in the FTSE 100, up 6.6% at 1,028.66 pence, after Barclays upgraded the emerging markets bank to Overweight from Equal Weight, raising its price target to 1,150 pence from 1,000p. Berenstein also upgraded Standard Chartered, to Outperform from Underperform, lifting its price target to 1,200p from 700p.
The UK jobless rate declined in the three months to January and the employment rate hit the highest since 1971, data from the Office for National Statistics showed Wednesday. The ILO jobless rate fell to 5.7% in three months to January from 6.0% in the quarter ending October. In the same period of last year, the unemployment rate was 7.2%. The expected rate was 5.6%.
Bank of England policymakers unanimously decided to keep the monetary policy unchanged at the meeting held on March 4 and 5, minutes of the meeting showed Wednesday. The monetary policy committee voted 9-0 to retain the benchmark rate at a historic low of 0.50% and quantitative easing at GBP375 billion. All members agreed that it was appropriate to leave the stance of monetary policy unchanged, although two members regarded this month's decision as finely balanced.
The pound retreated to its lowest level against the dollar since mid-2010 at USD1.4656 before recovering slightly to USD1,4680.
The main focus for investors now will be in the UK government budget presentation at midday and the conclusion US Federal Reserve meeting late in the day.
Chancellor of the Exchequer George Osborne is set to present the UK's government budget at 1230 GMT. He is expected to announce further measures to help investment in the North Sea and a further shakeup of the annuities market in his speech to Parliament.
"The budget may be a little different this year as it comes just a matter of weeks before the general election," says eToro analyst James Hughes. "So instead of hard-hitting measures to get the country back on the right foot, or in this case to continue the good work, we will likely see a budget full of promises and future plans that will try and show the country that the Conservative party is the party to drive the country forward."
Meanwhile, the Federal Open Market Committee meeting ends at 1800 GMT, with a press conference by Chair Janet Yellen starting at 1830 GMT. Focus will be on whether the FOMC removes its language about being "patient" before raising interest rates.
"After yet more strong payroll figures, we have seen rumours rife that June will be the month we see the first rate hike out of the US. However despite the payroll numbers, other economic data has not been performing as well," says eToro's Hughes.
"In my opinion, I don?t think we will see a rate hike until 2016. The economic data is not quite there showing that the economy can support the move higher, and the stagnant wage growth shows that, despite people being back in work, a rise in interest payments would hit hard on many as their earnings have just not been growing at a fast enough rate," Hughes writes.
European indices are down, with the CAC 40 down 0.3% and the DAX 30 down 0.4% after hitting new record highs on Monday.
Among other individual stocks in London, Smiths Group, down 1.4%, Wednesday reported a slight drop in pretax profit in the first half of its financial year, as the strength of the pound weighed on translated overseas revenue and its detection business continued to struggle, but the company expects to report an improved performance excluding foreign exchange movements in the second half of the year.
The engineering company, which has divisions for threat and contraband detection, medical devices, energy, communications and engineered components, reported a pretax profit of GBP131 million for the six months to January 31, down from GBP132 million a year earlier, as revenue slipped to GBP1.42 billion from GBP1.44 billion due to the strength of sterling.
Also in the economic calendar Wednesday, in the US, EIA crude oil stocks are at 1430 GMT.
US futures point to a flat to lower opening, with the S&P 500 and the Nasdaq 100 pointed flat, but with the DJIA down 0.1%.
By Daniel Ruiz; [email protected]
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