20th Nov 2013 10:52
LONDON (Alliance News) - UK equities trade mixed Wednesday mid-morning, with small caps slightly outperforming large companies, as investors anxiously awaiting minutes from the latest US Federal Open Market Committee meeting later in the day.
By mid-morning, the FTSE 100 is down 0.3% at 6,679.82, the FTSE 250 is down 0.3% at 15,223.57, while the AIM All-Share index is up 0.2% at 812.25.
Investors keenly await the release of minutes from the Federal Reserve's October monetary policy meeting as "bulls seek clarity on the Fed's taper timeline," says Toby Morris, senior sales trader at CMC Markets. The reining-in of the Fed's USD85 billion-a-month bond buying stimulus is deemed negative for equities because the flow of cheap money has been lifting the economy and companies.
"Although bullish exuberance has clearly softened in the run up to these minutes, don't think they won't hop back on the bandwagon if the release takes a dovish tone," cautions Morris.
Either way, the minutes are expected to lead to volatility "as investors attempt to decipher the underlying sentiment of the FOMC," says spreadex's Alex Conroy.
Traders also will be keeping an eye on US CPI and retail sales data for October scheduled for 1330 GMT. Retail sales are expected to show an increase to 0.1%, following on from a 0.1% decline in September. Consumer prices are expected to come in at 0%, from 0.2% previously.
Closer to home, Bank of England policy makers unanimously decided to retain the record-low base interest rate of 0.50% and the asset purchase programme at GBP375 billion, the minutes of the meeting revealed Wednesday. All committee members agreed that neither of the price stability knock-out conditions that would override the forward guidance provided in August had been breached.
Data released early Wednesday showed that Germany's producer prices declined for the third successive month in October, and at a faster pace than expected. The industrial producer price index decreased 0.7% on an annual basis in October, following the 0.5% drop seen in September, the Federal Statistical Office said. Economists had forecast a slower decline of 0.6% for October.
The German producer price index decreased 0.2% month-on-month compared to September, when it recorded a 0.3% rise. The index was expected to stay unchanged.
On a day with relatively few corporate releases or big movers, Telecom Plus, up 14%, is an exception. The utility services company is the leading gainer in the FTSE 350 after it revealed that it has entered into an agreement to acquire Electricity Plus Supply Ltd. and Gas Plus Supply Ltd. from Npower for GBP218 million. The company also announced that its pretax profit increased 9.6% to GBP13.7 million for the six months ended September 30 from GBP12.5 million the previous year, as sales jumped significantly. Sales increased 17% to GBP245.8 million from GBP210.0 million. Telecom Plus also increased its interim dividend by 23% to 16 pence from 13 pence the previous year.
Barclays initiated the whole of the housebuilding index Wednesday. FTSE 250-gainers Barratt Developments, up 1.6%, Taylor Wimpey, up 0.6%, and Redrow, up 0.1%, were all initiated with an Overweight recommendation. Meanwhile Bellway, down 1.2%, and Bovis Homes, down 1.3%, are falling after being initiated with an Underweight rating.
Still to come in Wednesday's data calendar, US CPI and retail sales data is scheduled for 1330 GMT, ahead of US existing home sales figures at 1500 GMT. The much-anticipated FOMC minutes are released at 1900 GMT.
By James Kemp; [email protected]; @jamespkemp
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