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LONDON MARKET CLOSE: Pound Rallies As Haldane Joins BoE Dissenters

Thu, 21st Jun 2018 17:07

LONDON (Alliance News) - Stocks in London ended lower, with the FTSE 100 falling to its lowest level since early May amid unease over the impending OPEC meeting, while the pound rose after a formerly dovish Bank of England policymaker changed his stance. The FTSE 100 index closed down 0.9%, or 70.96 points at 7,556.44. The FTSE 250 ended down 0.9%, or 197.33 points, at 20,729.05, and the AIM All-Share closed down 0.2%, or 1.85 points, at 1,093.79.The Cboe UK 100 closed down 1.1% at 12,811.43, the Cboe UK 250 closed down 0.9% at 18,990.87, and the Cboe UK Small Companies closed down 0.3% at 12,859.99.On the London Stock Exchange, Shire ended among a handful of blue chip risers up 2.1% after the Irish drugmaker said it has secured approval from the US Food & Drug Administration to expand the offering of Cinryze to children aged six years and older with hereditary angioedema, a rare disorder characterized by recurrent episodes of severe swelling. Cinryze has been approved in the US since October 2008 for routine prophylaxis against attacks in adolescents and adults living with hereditary angioedema. The company said Cinryze is the first and only therapy indicated in the US to help prevent angioedema attacks in pediatric patients with hereditary angioedema as young as six years. The approval was based on data from a dedicated Phase 3 multicenter single-blind study that evaluated the use of Cinryze in 12 patients living with hereditary angioedema aged seven to 11. Sky closed up 1.8% after Walt Disney upped its offer to purchase Twenty-First Century Fox to USD71.30 billion, trumping an offer made by rival Comcast. Disney's Wednesday offer is much higher than its original offer of USD52.40 billion and also exceeds Comcast's USD65 billion offer last week.Under its raised offer, Disney has agreed to acquire for a price of USD38 per Fox share the same businesses it had agreed to acquire under the previously announced merger agreement, including Fox's stake in the London-listed pay-TV company.At the other end of the large cap index, United Utilities ended as the worst performer down 6.2% after the stock went ex-dividend. This means new buyers no longer qualify for the latest dividend payout. Housebuilders were also weighing on the large caps with Barratt Developments down 3.8%, Taylor Wimpey and Berkeley Group down 2.9%, and Persimmon down 3.1%. "Housebuilders are back in focus as markets considered the impact of rising interest rates. The Brexit uncertainty and second home clampdown has already proven detrimental to the UK housing market, and with an August rate hike potentially on the cards, we are seeing investors fear that yet another negative story is building for the housebuilders," said IG market analyst Joshua Mahony.In the FTSE 250, CYBG ended as the best performer up 3.8% after JPMorgan raised the challenger bank to Neutral from Underweight believing its merger with peer Virgin Money will be "highly accretive". Virgin Money closed up 1.9%.Dixons Carphone closed up 2.9% despite seeing a decline in annual profit, as the mobile phone and electronics retailer's profit warning last month cushioned the blow. Dixons Carphone said pretax profit fell to GBP289 million from GBP404 million the year before. Adjusted pretax profit was down to GBP382 million from GBP500 million year-on-year, in line with the company's profit warning.At the time of the warning, the group said it expected profit to fall as a result of declining market conditions, reduced profit margins, and expensive network contracts in the UK."Dixons Carphone elegantly demonstrated the art of guidance. Having carefully laid the groundwork last month with a warning, today's news has boosted the share price," said IG chief market analyst Chris Beauchamp.The pound was firm quoted at USD1.3255 at the London equities close, compared to USD1.3201 at the close Wednesday, after the Bank of England left UK interest rates unchanged at 0.5%.Sterling hit its lowest level in 2018 versus the greenback at USD1.3102 in the run up to the rate decision, but spiked after it emerged policymakers voted 6 to 3 to leave rates on hold. Economists had expected a 7-2 voting split, in line with the previous meeting.Usual hawks Ian McCafferty and Michael Saunders kept their stances unaltered, having been the only two members who voted to increase rates at the previous Monetary Policy Committee meeting in May. However, the market was taken by surprise as the BoE's chief economist Andy Haldane voted in favour raising rates for the first time since joining the MPC in 2014 to make up the triumvirate. "That three members supported a hike at today's meeting, however, highlighted the unease that a number of members are feeling in delaying the next hike in interest rates. While some members of the MPC - including Silvana Tenreyro and Sir Dave Ramsden - view the cost of waiting a little as low we continue to envisage the Bank of England hiking rates at its next meeting in August," said analysts at Lloyds. Although all members agreed that any future increases in the benchmark rate are likely to be at a gradual pace and to a limited extent. All nine policymakers voted to maintain quantitative easing at GBP435 billion.The MPC said it intends not to reduce the current stock of purchased assets until the bank rate reaches around 1.5% compared to the previous guidance of around 2%. Any reduction in the stock of purchased assets will be conducted at a gradual and predictable pace, the bank said."The minutes from today's meeting contain a number of inconsistencies we find it hard to square. While we continue to believe the data will not justify the BoE hiking rates in August, today's meeting increases the risk that they hike regardless," said analysts at Bank of America. Ahead, BoE Governor Mark Carney will give a speech at the Lord Mayor's bankers and merchants dinner at Mansion House in the evening at 2115 BST.In Paris the CAC 40 ended down 1.1%, while the DAX 30 in Frankfurt ended down 1.4%. The euro stood marginally higher at USD1.1599 at the European equities close, against USD1.1581 late Wednesday. Stocks in New York were lower the London equities close. The DJIA was down 0.5%, the S&P 500 index down 0.3% and the Nasdaq Composite down 0.3%. The tech-heavy Nasdaq was retreating from the record closing high set on Wednesday.The pullback by the Nasdaq is partly due to a notable decline by shares in e-commerce giant Amazon, which was moving lower along with other online retailers after the US Supreme Court ruled states can force online shoppers to pay sales tax.On the US economic front, the Labor Department released a report showing a modest decrease in initial jobless claims in the week ended June 16.The report said initial jobless claims dipped to 218,000, a decrease of 3,000 from the previous week's revised level of 221,000. Economists had expected jobless claims to inch up to 220,000 from the 218,000 originally reported for the previous week.Meanwhile, the Conference Board released a report showing a slightly smaller than expected increase by its index of leading economic indicators in month of May.Brent oil was lower quoted at USD73.62 a barrel at the London equities close from USD75.05 late Wednesday, ahead of the 174th Organisation of the Petroleum Exporting Countries' meeting.The cartel convenes in Vienna, Austria on Friday under pressure from the US, China and Russia to pump more oil in order to lower prices. OPEC and Russia agreed to curb production in late 2016."The market is widely expecting some sort of deal to be struck, most likely a scaling up in production. Should for whatever reason no deal be agreed we can expect the price of oil to rally. Similarly, should no the group agree on increasing production to sharply, above the 600,000 to 800,000 barrels per day circulating then the price of oil could fall away quickly," said City Index's Fiona Cincotta.Gold was down quoted at USD1,268.42 an ounce at the London equities close against USD1,274.01 at the close Wednesday.The economic events calendar Friday has Japan inflation readings at 0030 BST and France first quarter GDP readings at 0745 BST. There is also services PMI data from France, Germany, the eurozone and US at 0800 BST, 0830 BST, 0900 BST and 1445 BST respectively. In a light UK corporate calendar on Friday there are full year results from specialist recruitment firm Prime People and half year results from Edinburgh Worldwide Investment Trust.
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