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LONDON (Alliance News) - Despite some strong individual stock movers on a day at the height of the third-quarter earnings calendar, UK equity indices are drifting lower Thursday, while currency markets are flat, ahead of central bank announcements due later in the day.
By mid-morning the FTSE 100 is down 0.2% at 6,728.00, the FTSE 250 is flat at 15,414.25, and the AIM All-Share is down 0.1% at 814.33.
"European markets opened lower this morning as investors refused to commit to long positions amidst a series of economic announcements due today which could have a massive impact on investors? sentiment", says Spredex trader Shavaz Dhalla.
It has been a quiet morning in the economic calendar, ahead of the major events later in the day, leaving forex markets flat and equities focused on earnings. In addition to the expected announcements from the European Central Bank and Bank of England, the US reports GDP data and jobless claims this afternoon.
Randgold resources has rocketed to the top of the FTSE 100 gainers table. The Africa-focused gold mining company is up 7.3% after reporting that third-quarter production increased 14%, to 233,677 ounces, from 204,475 ounces previously as its Kibali site in the Democratic Republic of Congo poured first gold and started commercial production. Randgold is the top pick of London-listed gold stocks for Liberum Capital mining analyst Kate Craig. "The market is only in the mood to reward once you actually achieve something", says Craig.
The second biggest blue-chip gainer, Tate & Lyle, is up 1.0% after the company announced earnings per share of 29.9p, ahead of the expected 29.0p. Potential headwinds for the company come in the form of continued lower global Sucralose pricing and a new tax in Mexico, says Numis Securities. As part of new measures to tackle the country's growing obesity problem, the Mexican government is introducing a new 1 peso per litre tax on soft drinks, expected to be signed in January 2014. Mexican imports account for 13-14% of the US high fructose corn syrup market.
Schroders is the biggest FTSE 100 faller. The asset manager is down 4.0% despite releasing results in-line with, or even better than, some expectations. Numis Securities analyst David McCann says that if he could hold one stock in the sector, and couldn't change over a five year period, it would be Schroders, because of the "diversity of the business and downside protection". However, with equity markets at multiple-year highs and Schroders stock price already including lots of good news, Shore Capital analyst Owen Jones says it's unsurprising to see some profit taking today.
Halfords leads the FTSE 250 gainers, up 12% after reporting pretax profit for the first half well ahead of expectations. The company's cycling division continues to outperform, says Andrew Wade, an analyst at Numis, driven in part by favourable weather conditions. Overall like-for-like sales rose 6.2%, boosted by a 7.7% increase in its retail stores thanks to strong sales of cycles.
Inmarsat leads the FTSE 250 fallers, down 6.2%, after the satellite communications company said that several of its businesses were impacted by reduced military activity in Afghanistan, and that the launch of its Global Xpress satellite was delayed.
On AIM, independent cinema chain Everyman Media Group began trading Thursday morning, following its GBP8.1 million initial public offering. Shares have jumped 9.5% from the opening price, but 18% from the placing price.
The pound and the euro are both little changed against the dollar as traders wait in the wings for volatility sure to be caused by the central bank announcements yet to come, currently at USD1.6075 and USD1.3520 respectively.
The Bank of England is first up at midday, with a "no-change" decision widely expected. The bigger focus will be given to the European Central Bank, with mounting speculation of a potential rate cut giving way to rumor driven volatility in recent days.
"The euro pushed higher yesterday afternoon as ?sources? reported that the ECB would avoid cutting interest rates today even amid the dip in inflation. The decision, of course, was not made yesterday and will be debated by committee during the course of this morning," comments Rabobank Senior Strategist Jane Foley.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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