18th Sep 2013 09:26
LONDON (Alliance News) - UK Equities are tightly range-bound Wednesday as traders await the all-important FOMC announcement in the US, while the pound pushes higher as the Bank of England announces a unanimous vote by the MPC to keep stimulus unchanged.
By mid-morning Wednesday, the main UK equity markets are little changed. The FTSE 100 is up 0.1% at 6,576.20, the FTSE 250 is down 0.1% at 15,145.75 and the AIM All-Share is flat 785.64.
Minutes from September's meeting of the BoE's Monetary Policy Committee showed, as expected, a unanimous 9-0 vote to keep the UK base rate of interest unchanged at 0.5% and quantitative easing unchanged at GBP375 billion. The pound jumped against other majors on the announcement, hitting a high of USD1.5960 against the dollar and EUR0.8365 against the euro, bring the physiological 1.60 level in the cable very much into range.
Sector-wise in UK equities there is little to call as traders enter wait-and-see mode ahead of the Fed announcement after European market close Wednesday.
Banks are the top gaining FTSE 350 sector, bouncing from heavy selling Tuesday when the UK government sold part of its holding of Lloyds group. As a sector the banks are up 1.1%, while Lloyds is up 1.2%, Standard Chartered is up 1.3% and HSBC is up 1%. Barclays is the exception, the shares trading down 6% as the latest tranche of about 3.2 billion new shares are admitted to the market following the July rights issue.
Industrial metals are losing on the back of a lower gold price. The yellow metal has broken below the USD1,300 level to make a low of USD1,291.30 per ounce Wednesday, not far from lows seen earlier in the month of about USD1,280 per oz.
Consequently, the main fallers on the FTSE 250 are largely gold miners, while the top gainer is Redrow. The house builder reported full-year results that beat expectations and show a strong forecast, helped by the UK government's Help-to-Buy scheme.
Eurozone construction numbers just released show that construction-output growth more than halved to 0.3% in July from 0.9% in June. The month-on-month decline was driven by a 0.2% decrease in civil engineering. Meanwhile, building construction increased at a faster rate of 1.1%, following a 0.4% rise in June.
US housing starts numbers are scheduled before the US open at 1330BST, but a quiet day for European equities is expected to continue ahead of the main event after market close.
At 1900BST the FOMC will announce its latest policy decisions on interest rates and quantitative easing. Taper talk dominates the market Wednesday. A reduction of USD10 billion from monthly asset purchases has been widely forecast, but less convincing readings from US economic indicators in the last month have created some doubt. It remains in the balance whether the Fed will announce tapering from this month's meeting or wait until slightly later in the year.
By Jon Darby; [email protected]; @jondarby100
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