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London midday: Stocks maintain losses as BoE stands pat

By Michele Maatouk

Date: Thursday 17 Sep 2020

London midday: Stocks maintain losses as BoE stands pat

(Sharecast News) - London stocks were still in the red by midday on Thursday after the Bank of England left interest rates and its bond-buying target unchanged but said it was ready to take further action amid economic uncertainty.
At 1220 BST, the FTSE 100 was down 0.7% at 6,037.80 after the BoE voted unanimously to keep interest rates at a record low of 0.1% and leave the asset purchase programme at £745b.

Meanwhile, sterling lost ground against the dollar, trading down 0.5% at 1.2903 after the Bank said it will engage with regulators on how to implement negative rates.

Economists had expected the BoE to leave policy unchanged to give the MPC time to take account of Brexit talks and a potential surge in unemployment as the government withdraws its support for jobs. Many economists expect the BoE to make its next move in November with an expansion of quantitative easing.

"Recent domestic economic data have been a little stronger than the committee expected at the time of the August [inflation] Report, although, given the risks, it is unclear how informative they are about how the economy will perform further out," the MPC minutes said. "The committee will continue to monitor the situation closely and stands ready to adjust monetary policy accordingly to meet its remit."

Investors were also mulling over the latest policy announcement from the US Federal Reserve overnight.

Matthew Luzzetti, senior economist at Deutsche Bank, said the broad messaging from the September FOMC meeting was close to expectations, with the most resounding signal being that the fed funds rate is expected to remain at zero for a long period.

"The Committee updated their forward guidance to reinforce this message, bringing it in line with their recent shift toward an average inflation targeting strategy," he said. "The 2023 median dot co-signed this message, with the fed funds rate expected to remain at zero over that horizon. Chair Powell's presser also hammered home the importance of this 'powerful' update to their language. With these revisions, the signal was that no further revisions are expected to forward guidance for some time."

In equity markets, Informa was the worst performer on the FTSE 100 after a downgrade to 'neutral' at JPMorgan Cazenove, which said it was waiting for business travel to return.

Miners were also in the red as copper prices declined, with BHP, Rio, Antofagasta and Anglo American all weaker.

Playtech shares tumbled after the gambling software company reported a slump in first-half profit following retail closures and the cancellation or postponement of sporting events due to the Covid-19 pandemic.

On the upside, retailer Next rallied as it posted a drop in half-year pre-tax profit to £9m from £320m but upgraded its profit guidance after sales in the first half and beyond held up better than it had expected. Next increased its central guidance for annual pre-tax profit to £300m from £195m.

Online trading platform IG Group gained after it reported a 62% jump in first-quarter revenue as it continued to benefit from high levels of trading activity and new client acquisition.

LXI REIT was also a high riser after it bumped up its quarterly dividend guidance following "robust" rent collection for the quarter ending September.

Market Movers

FTSE 100 (UKX) 6,037.80 -0.67%
FTSE 250 (MCX) 17,689.76 -0.59%
techMARK (TASX) 3,851.11 -0.21%

FTSE 100 - Risers

Next (NXT) 6,386.00p 3.50%
SEGRO (SGRO) 965.80p 2.40%
Rentokil Initial (RTO) 558.20p 2.38%
Ocado Group (OCDO) 2,694.00p 2.01%
ITV (ITV) 66.96p 1.70%
Melrose Industries (MRO) 123.95p 1.60%
Hikma Pharmaceuticals (HIK) 2,670.00p 1.48%
AstraZeneca (AZN) 8,617.00p 0.88%
Compass Group (CPG) 1,320.00p 0.80%
Sainsbury (J) (SBRY) 186.40p 0.76%

FTSE 100 - Fallers

Informa (INF) 386.00p -3.72%
Polymetal International (POLY) 1,883.00p -3.44%
International Consolidated Airlines Group SA (CDI) (IAG) 129.05p -2.38%
BHP Group (BHP) 1,756.80p -2.35%
Barclays (BARC) 100.58p -2.31%
Antofagasta (ANTO) 1,084.50p -2.30%
HSBC Holdings (HSBA) 310.25p -2.13%
WPP (WPP) 634.20p -2.10%
NATWEST GROUP PLC ORD 100P (NWG) 101.00p -2.04%
Intermediate Capital Group (ICP) 1,230.00p -1.99%

FTSE 250 - Risers

IG Group Holdings (IGG) 836.00p 5.89%
Gamesys Group (GYS) 1,182.00p 3.14%
Electrocomponents (ECM) 729.00p 2.39%
Dixons Carphone (DC.) 96.00p 2.35%
LXI Reit (LXI) 114.00p 2.33%
Essentra (ESNT) 289.20p 2.26%
Trainline (TRN) 393.00p 2.08%
Assura (AGR) 81.00p 2.02%
Morgan Sindall Group (MGNS) 1,248.00p 1.96%
AO World (AO.) 199.80p 1.94%

FTSE 250 - Fallers

Hammerson (HMSO) 21.75p -7.05%
Rank Group (RNK) 103.60p -7.00%
Network International Holdings (NETW) 350.00p -6.96%
Playtech (PTEC) 366.60p -6.36%
Equiniti Group (EQN) 108.80p -5.72%
Hays (HAS) 111.90p -4.03%
Babcock International Group (BAB) 221.70p -3.61%
Future (FUTR) 1,834.00p -3.58%
Kainos Group (KNOS) 973.00p -3.28%
Investec (INVP) 135.75p -3.21%

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