26th Sep 2013 09:09
LONDON (Alliance News) - The UK's main stock indices are flat mid-morning Thursday as investors await US fiscal decisions.
London's markets have remained relatively static in early trading as investors grow increasingly wary of a possible US government shut-down, with federal budget talks deadlocked. If the Senate and House of Representatives cannot come to agreement on a budget by Tuesday, the government will run out of money to operate, forcing a damaging shut-down of most of its operations within weeks.
Alongside the budget deadline, there is also the need to negotiate a higher US government debt limit. Republican leaders have notified members that a vote on increasing the ceiling could come as early as Friday. Treasury Secretary Jack Lew has warned Congress that if things stay the same, the Treasury will exhaust its emergency borrowing measures by October 17 at the latest.
By mid-morning Thursday, the FTSE 100 is flat at 6,545.09, the FTSE 250 is down 0.2% at 14,993.08, whilst the AIM All-Share index is up 0.1% at 789.12
Mixed European data has seen the euro drop to a one-week low against the pound.
Economic data released early Thursday showed that confidence among French consumers improved for a third consecutive month. The headline consumer confidence index rose to 85 in September from 84 in the previous month, in line with consensus forecasts cited by FXstreet.com.
Italian retail sector business activity weakened further in July. Retail sales decreased a seasonally adjusted 0.3 percent compared to June, when they logged a 0.2 percent decline.
In the aftermath of the data releases, the euro dropped to 0.8396 against the pound.
At the individual stock level, African Minerals, up 35%, is a big winner. The AIM-listed company has announced that it has entered into an agreement for investment at its flagship Tonkolili iron-ore site. Tianjin Materials and Equipment Group Corporation has agreed to pay USD990 million for a 16.5% economic interest in the project based on a site valuation of USD6 billion.
TUI Travel, up 1.5%, is one of the biggest blue-chip gainers. The travel group has increased is underlying operating profit growth forecast and said that it expects to achieve full-year profit growth of at least 11% on a constant currency basis. TUI has seen strong high-season summer trading in the UK and Nordics. It said that so far it has sold around 31% of its overall mainstream programme for the winter 2013/2014 season. Numis has upgraded TUI to Add from Hold.
Conversely, Thomas Cook Group, down 7.2%, is one of the biggest fallers on the FTSE 250. Despite reporting positive conditions, traders have reacted negatively to the company leaving its profit forecast for 2013 unchanged.
There is a large amount of US data still to come Thursday. US core personal consumption expenditures, GDP data and jobless claims numbers are all scheduled for 1330 BST. US pending homes sales information is at 1330 BST. EIA natural gas storage change is expected at 1530, before Kansas Fed manufacturing activity information at 1600 BST.
By James Kemp; [email protected]
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