CSP.L Share News (CSP)

LONDON (Alliance News) - London shares ended lower on Wednesday, with a modest recovery in the pound applying pressure on stocks after the FTSE 100 touched record highs on Tuesday, as the market focuses on the US Federal Reserve meeting minutes, due at 1900 BST.

The FTSE 100 index ended down 0.7%, or 46.87 points, at 7,024.01, and the FTSE 250 index closed 0.7% lower, or 116.92 points, at 17,956.28. The AIM All-Share fell 0.1%, 0.41 point, at 826.72.

The BATS UK 100 index finished 0.6% lower at 11,879.33, the BATS 250 fell 0.7% at 16,313.46, while the BATS Small Companies index dropped 0.5% at 11,141.66.

The recovery in the pound on Wednesday was attributed to Prime Minister Theresa May's move to see off a Tory rebellion by allowing her MPs to back a Labour motion calling for "full and transparent debate" on the Brexit plan and "proper scrutiny" of this plan before exit proceedings begin.

As a result, the pound appears to have come to an end of its recent bout of weakness against the dollar after Friday's 'flash crash'. At the London equities close, the UK currency was higher against the greenback for the first time in the past five trading days. Sterling was quoted at USD1.2192 at midday, compared to USD1.2224 at the London equity markets close on Tuesday.

The pound remained higher against the dollar despite the news that, crucially, the motion does not call for a vote on the strategy before Article 50 of the EU treaties is triggered by the end of March, and is not binding on ministers as it is being brought forward in an Opposition Day debate.

The recent fall in the pound had helped the FTSE 100 to reach a new record high of 7,129.83 on Tuesday, surpassing the 7,122.74 peak reached at the end of April 2015.

In Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt ended down 0.4% and 0.5%, respectively. The euro was quoted at USD1.1007 at the equities close, compared to USD1.1070 on Tuesday.

The main event of the day will arrive in the London evening, with the release of the minutes from the last US Federal Open Market Committee meeting held on September 21.

In September, the FOMC decided to maintain the benchmark federal funds rate at 0.25% to 0.50%, pending signs of higher inflation and further strengthening of the US labour market. However, the committee looks likely to raise rates before the end of 2016, based on individual members' projections, with just the meetings in November and December ahead.

Oanda senior market analyst Craig Erlam believes that, of those two meetings, November appears "all but off the table", coming a week before the US Presidential election and not being accompanied by a press conference by Fed Chair Janet Yellen.

"December on the other hand is now heavily priced in by the markets – currently 69% based on Fed Funds futures - with investors coming around to the idea that the Fed is determined to raise rates this year," said Erlam.

"The minutes today could offer good insight into [...] what it is [FOMC members] want to see before doing so and just how many voters are currently on the fence," noted the analyst.

In New York at the European equities close, the Dow Industrials and the S&P 500 index were flat and the Nasdaq Composite was down 0.2%.

Brent oil was quoted at USD51.73 a barrel, with investors taking a breath after the strong gains the North Sea benchmark recently made following the news that Russia is ready to join OPEC countries in reaching an agreement to cut oil production and therefore boost crude prices. On Tuesday, Brent stood at USD52.46 a barrel.

Gold also remained firm, quoted at USD1,252.80 an ounce at the equities close, compared to its level of USD1,258.60 an ounce at the equities close on Tuesday.

Shares in Fresnillo fell 1.1%. The Mexican gold miner remained on track to deliver its full-year production guidance, after reporting quarterly results in line with expectations, but said the second phase of commissioning of the San Julian mine has had to be pushed back. Gold miner peer Randgold Resources ended 0.6% down.

Hargreaves Lansdown ended down 0.2%, having dropped as far as 3% earlier in the day. It will be "impossible" for Hargreaves to meet consensus expectations due to regulatory, structural and competitive threats, said Liberum, including the creation of an enlarged competitor via Interactive Investor's purchase of TD Bank Group's direct investing business.

Interactive Investor agreed to buy TD Bank's European direct investing business in a move that will create the UK's second largest online investment broker, behind Hargreaves Lansdown. The deal will create a broker with around GBP18 billion in assets under administration, compared to Hargreaves Lansdown's reported GBP61.70 billion in assets under administration at the end of June.

Hargreaves Lansdown releases a trading statement on Thursday.

In the FTSE 250, PageGroup made gains of 4.7% on top of the 5.5% added on Tuesday. The recruitment company's shares were reacting to a string of price target increases by brokers including HSBC, Barclays, Goldman Sachs, and JPMorgan.

Numis said PageGroup's third-quarter update on Tuesday offered some relief to investors, after the recruitment company saw a small rise in gross profit, but the broker noted the "uncertain outlook" persists after the group experienced a decline in its UK business.

Countryside Properties rose 2.2%. The housebuilder and regeneration company said the initial increase in cancellation rates following the Brexit vote in June has been more than offset by trading since. The group said trading over the summer months and into the autumn selling season had been "robust", and said it was entering 2017 with strong outlet growth and a good order book.

On the flip side, Domino's Pizza Group declined 5.5%, the biggest FTSE 250 loser. The pizza-delivery chain reported growth in sales in the third quarter of 2016, driven by its store opening programme, and it said it will meet market expectations for the full year.

Growth in like-for-like sales, however, was lower year-on-year at 3.9% in the UK, having risen by 15% the prior year. Whilst there was expectation of a slowdown in Domino's Pizza Group's like-for-like sales growth, analysts at Swiss bank UBS said the market may still be disappointed by the extent of the slackening in pace.

Online takeaway operator Just Eat fell 2.3% on the read-across.

Highlights in the UK corporate calendar on Thursday are third-quarter results from Unilever, a trading statement from Mondi, and first-quarter results from Sky. Among the rest, Booker Group publishes half-year results, while WH Smith, Imperial Innovations Group, and Game Digital issue full-year results.

In the economic calendar, China's trade balance is at 0330 BST, Japan's Tertiary Industry index is at 0530 BST, while inflation data from Germany are at 0700 BST. In the US, initial and continuing jobless claims are at 1330 BST and the EIA crude oil stocks are at 1600 BST.

At 1430 BST, Bank of England Governor Mark Carney speaks at the Future Forum in Birmingham Town Hall.

By Daniel Ruiz; danielruiz@alliancenews.com

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