18th Mar 2015 12:00
LONDON (Alliance News) - Bank of England policymakers unanimously decided to keep monetary policy unchanged at their March meeting, the minutes showed Wednesday, with concern focused on the strength of the pound and the likelihood this will keep inflation below target for longer.
The monetary policy committee voted 9-0 to retain the benchmark interest rate at a historic low of 0.50% and the size of the quantitative easing programme 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. There was a range of views over the most likely path of Bank Rate in future, but all members agreed that it was more likely than not that the Bank Rate would increase over the next three years, the minutes said.
The pound weakened against other major currencies after data also showed that UK wage growth slowed in January.
Data from the Office for National Statistics showed that the UK's wage growth fell to 1.8% in the three months to January, down from 2.1% in the three months to December.
At the same time time, the UK ILO jobless rate fell to 5.7% in three months to January from 6% in the quarter ending October. The expected rate was 5.6%. At the same time, the employment rate came in at 73.3%, the highest since records began in 1971.
The claimant count fell to 2.4% in February, in line with forecast, from 2.5% in January. The number of people claiming jobseeker's allowance decreased for 28 consecutive months. Jobless claims declined 31,000 to 791,200 in February. It was expected to decline by 30,000.
The pound fell to a near five-year low of 1.4646 against the US dollar. Against the euro and the Swiss franc, the pound dropped to near two-week lows.
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Markets: London shares are trading higher, with Standard Chartered the best-performing stock in 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.
Wall Street is set for a lower start, with stock futures indicating that the DJIA will open down 0.5% and the S&P 500 and the Nasdaq 100 will open down 0.4%.
FTSE 100: up 0.7% at 6,888.51
FTSE 250: up 0.5% at 17,284.00
AIM ALL-SHARE: up 0.1% at 716.42
GBP-USD: down at 1.4648
EUR-USD: up at 1.0608
GOLD: flat at USD1,149.95 an ounce
OIL (Brent): up at USD53.38 a barrel
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Top Corporate News
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Smiths Group 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 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. Analaysts said the results met their expectations, but they were concerned about the outlook for some of the company's diverse business units.
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Engineering company IMI said Robert Haldane Smith, Lord Smith of Kelvin, is to become its new chairman, effective after its annual general meeting on May 7. As a result of the appointment, Smith will step down as chairman of FTSE 100 power company SSE following that company's annual general meeting on July 23. SSE said he was stepping down earlier than originally intended.
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BG Group said it has produced its first oil from the Knarr field in the North Sea offshore Norway. The oil and gas producer said the Petrojarl Knarr floating production, storage and offloading vessel had started production from the Knarr oil field in the North Sea, offshore Norway. The vessel has a production capacity of 63 000 barrels of oil equivalent per day and a storage capacity of 800 000 barrels. BG Group is the operator of the field with a 45% working interest.
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AstraZeneca said it had received positive top-line results from Phase III studies into investigative drug PT003 for the treatment of Chronic Obstructive Pulmonary Disease. The two 24-week studies looked at whether the treatment improved lung function in patients with the disease. PT003 is a twice-daily fixed-dose combination of glycopyrronium, a long-acting muscarinic antagonist, and formoterol fumarate, a long-acting beta-2 agonist. The treatment is delivered using a pressurised metered dose inhaler developed by Pearl Therapeutics, which was acquired by AstraZeneca in 2013.
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Royal Bank of Scotland Group said it will de-list its shares from Euronext Amsterdam due to the low trading volumes in its stock on that exchange. The bank said it expects the cancellation of the listing to be April 17, meaning the last trading day will be the day before. RBS will retain its London listing and its American Depository Receipts on the New York Stock Exchange.
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British Land Co said it will undertake a GBP50 million internal refurbishment of the Meadowhall shopping centre near Sheffield, as the centre celebrates its 25th birthday in 2015, and it is hoping the refurbished centre will appeal to more premium and lifestyle retailers.
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Phoenix Group Holdings reported a jump in a key measure of operating profit in 2014, bolstered by the performance of the part of the group responsible for managing its life funds. The closed life fund consolidator said it made a GBP483 million operating profit in 2014, compared with GBP438 million in the prior year, as higher operating profit within Phoenix Life more than offset a fall in that reported by the Ignis operations sold to Standard Life PLC last year.
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Galliford Try said it has been appointed to the public sector construction frameworks for the south and north west of England. Galliford said it has been selected as one of six contractors on all three lots of the Southern Construction Framework, which will cover the South West, South East and London. On Tuesday, Kier Group and Morgan Sindall Group said they also were named on all three lots. In addition, Galliford has been appointed as one of the 11 contractors on the medium-value lot of the North West Construction Hub, which is worth up to GBP400 million over four years.
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Imagination Technologies Group lowered its expectations for licence revenue growth, saying it now expects to post full-year licence revenue in line with the previous year, with the potential for single digit growth if remaining deals close on time, as licensing activity has been "a little muted" in its second half to date. In the previous year to end-April 2014, Imagination posted licensing revenue of GBP38.3 million. At the time of its interim results in December the company was targeting 10% growth in licensing revenue. Imagination Technologies is set to rejoin the FTSE 250 from next Monday.
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AIM Movers
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Xtract Resources shares are up by three quarters after it discovered a major gold-bearing vein at the Chepica gold and copper mine project in Chile. Camco Clean Energy is doing well after REDT, in which it holds a 49% stake, was awarded a EUR400,000 grant to develop and install a hybrid energy storage platform in South Africa. Eurasia Mining is up 7.4% after it said it has made further progress on securing the mining licence for the West Kytlim alluvial platinum project. Stellar Resources is another gainer after the participants in the Horse Hill prospect in Surrey reported a further analysis undertaken on the site has increased the potential oil pay. Synety Group shares are down by almost a third after it raised funds in a discounted placing and posted a widened pretax loss for 2014 as it continued to ramp up investments. Stilo International is down after it reported a drop in sales and earnings before interest, tax, depreciation and amortisation in 2014, due to a reduction in orders for a software product and the suspension of a major conversion project by one of its customers.
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Other Top Economics And General
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Eurozone construction output increased for the second straight month in January, at a faster pace, data from Eurostat showed. Output in the construction sector climbed 1.9% month-on-month in January, much faster than December's 0.2% increase, which was revised from a 0.8% decline. In November, production had fallen 0.4%. Output in the building sector grew 2.3% in January from the previous month and civil engineering sector registered an increase of 0.2%.
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Home prices in majority of the Chinese cities continued to fall in February on weak demand, the National Bureau of Statistics said. On a monthly basis, home prices declined in 66 out of 70 cities surveyed by the government. In January, prices of new houses decreased in 64 cities. Compared with the same period of last year, house prices fell in 69 cities and remained unchanged in Xiamen.
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Israeli Prime Minister Benjamin Netanyahu's Likud party was set to emerge as the big winner in national elections with almost all of the ballots counted early Wednesday. Likud was projected to take 29 seats while the centre-left Zionist Camp list was to take 24 seats, Israel Radio reported. The Joint List, a grouping of largely Arab parties, was expected to be the third biggest with 14 seats.
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The Ukrainian parliament passed an amendment stipulating that the separatist-held territories in the country's east will get political autonomy only after conducting local elections under Ukrainian law. Separatist leaders condemned the move, which was backed by 265 of 347 lawmakers, saying that it undermines last month's peace agreements. "The amendment represents a point of no return to the Minsk agreements," Denis Pushilin of the "Donetsk People's Republic" said according to the rebel-run Donetsk News Agency.
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Opposition Republicans in the US Congress proposed a budget that would balance the budget within nine years while repealing President Barack Obama's signature health-care programme. The proposal sets up a looming clash between Obama, a left-leaning Democrat, and conservative Republicans, who have majorities in both chambers of Congress, over spending for the 2016 budget year, which begins October 1. The budget debate follows Monday's reimposition of the statutory government debt limit. The cap had been temporarily suspended under February 2014 budget legislation, which has now expired with the national debt at USD18.1 trillion. The US Treasury expects to be able to keep up with government spending for several months before requiring congressional authorization to borrow money.
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Afternoon Watchlist (all times in GMT)
12:30 UK Budget Report
14:30 US EIA Crude Oil Stocks change
18:00 US Fed Interest Rate Decision
18:00 US Fed's Monetary Policy Statement
18:00 US FOMC Economic Projections
23:50 Japan Foreign bond/stock investment
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Thursday's Key UK Corporate Events
Xaar Full - Year Results
Arbuthnot Banking Group - Full Year Results
Crest Nicholson - Interim Management Statement
EMIS - Full Year Results
Next - Full Year Results
Savills - Full Year Results
Ophir Energy - Full Year Results
Premier Farnell - Full Year Results
Secure Trust Bank - Full Year Results
Sopheon - Full Year Results
Ted Baker - Full Year Results
FW Thorpe - Full Year Results
EnQuest - Full Year Results
Lamprell - Full Year Results
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Thursday's Key Economic Events (all times in GMT)
04:30 Japan All Industry Activity Index
09:00 EU Economic Bulletin
10:15 EU Targeted LTRO
12:30 US Current Account
12:30 US Jobless Claims
14:00 US CB Leading Indicator
14:00 US Philadelphia Fed Manufacturing Survey
14:30 US EIA Natural Gas Storage change
23:50 Japan BoJ Monetary Policy Meeting Minutes
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