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LONDON (Alliance News) - Shares in London were flat after the open, with mining stocks continuing to benefit from the decline in the dollar after the Fed's dovish outlook on interest rates, while Berkeley Group Holdings was down after it raised concerns about UK housing policy.
The FTSE 100 was flat, or 1.97 points lower, at 6,199.11.
Berkeley Group Holdings was firmly in the red, down 2.3%. It said it is continuing to see good underlying demand for its properties, with the London market remaining stable, and expects full-year results at the top end of its expectations. The housebuilder, which focuses almost exclusively on more-expensive developments in London and the South East of England, said trading conditions are positive in the housing market, in spite of "global macro uncertainty, including the impending UK European Referendum".
However, whilst Berkeley said it expects to deliver results for the year to end April at the top end of expectations, it said transaction levels at the upper end of the housing market have been affected by the "significant increase" in transaction taxes over the last 18 months, which it said "will have consequential effects on both social mobility and the supply of new homes".
The housebuilder said that, since its interim results in December, it has sold 62 properties priced over GBP2.0 million, in line with a year earlier, when the high-end UK market slowed in the run-up to the country's general election. Berkeley said it remains on course to deliver GBP2.00 billion pretax profit in aggregate over the three years to 2018, and said GBP25.0 million of accelerated operating expenses coming from changes to its long term incentive plan will boost results for the current financial year.
HSBC Holdings was also trading lower, down 0.4%, after Nomura cut the bank to Reduce from Neutral on Thursday after the market close.
Meanwhile, miners were adding to the gains from Thursday, as commodity prices benefited from a fall in the dollar. Glencore was up 1.2%, Anglo American up 0.9% and BHP Billiton up 0.6%. Shares in Anglo American ended up 9.8% on Thursday, Glencore up 9.5% and BHP up 7.7%
CMC Markets analyst Jasper Lawler noted that the sharp drop in the dollar in the wake of the Federal Reserve meeting has created renewed demand for commodities.
"Oil is close to making new highs for 2016 whilst silver and copper are already there as of Thursday," Lawler said.
The greenback slid against other currencies after the US Federal Reserve's guidance for future interest rates came in below the market's expectations. The Fed left interest rates unchanged on Wednesday in a range from 0.25% to 0.50%, as widely expected, and the projections made by members showed policymakers expect two rate hikes by the end of this year compared to the four predicted back in December.
The euro was quoted at USD1.1294 shortly after the equities open Friday, while the pound was standing at USD1.4452. At the London close on Thursday, the single currency was quoted at USD1.1325. At the same time on Thursday, sterling was at USD1.4493, having reached a one-month high of USD1.4503 on Thursday.
Brent crude is quoted at USD41.33 a barrel after the open Friday, having stood at USD41.52 a barrel at the equities close Thursday. Meanwhile, gold is priced at USD1,261.25 an ounce, compared to USD1,263.47 an ounce Thursday.
Smiths Group was up 1.0% after RBC Capital upgraded the engineer to Outperform from Sector Perform. Meanwhile, broadcaster ITV was up 0.3% after Berenberg lifted its recommendation to Hold from Sell.
Shares in BT Group were up 0.6%. The telecoms giant named Simon Lowth as its new finance director, with plans for him to join the company on July 4. Lowth, who was the finance director at gas producer BG Group prior to its takeover by Royal Dutch Shell, will take over from Tony Chanmugam, who announced his plan to step down in February. Chanmugam will remain in place for a handover period, after which he will move to focus on integrating mobile network EE into BT, following its acquisition of the business last year.
Associated British Foods said discussions are continuing over its potential acquisition of the remaining shares in Illovo Sugar that it does not already own. AB Foods, which owns discount fashion retailer Primark as well as British Sugar, along with agriculture and consumer goods businesses, currently holds a 51.4% interest in Illovo, a large South African sugar producer.
"Shareholders are reminded that at this stage there can be no certainty that the discussions will result in a transaction. A further announcement will be made in due course," AB Foods said. Shares in AB Foods were up 0.4%.
The FTSE 250 was up 0.1% at 16,865.75 and the AIM All-Share was up 0.1% at 706.01. In Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt were down 0.6% and 0.7%, respectively.
Debenhams was the worst mid-cap performer, down 4.1%, after Investec cut the department store operator to Sell from Hold. Meanwhile, shares in Dunelm Group were down 1.1% after Merrill Lynch cut the homewares retailer to Neutral from Buy, according to traders.
Halma was down 1.3% after Exane BNP cut the health, safety and environmental technology group to Neutral from Outperform.
In Asia on Friday, the Japanese Nikkei 225 index closed down 1.3%. However in China, the Shanghai Composite ended up 1.7%, while the Hang Seng index in Hong Kong finished up 0.8%.
Members of the Bank of Japan's monetary policy board implemented a policy of negative interest rates in order to fuel the ongoing fight against deflation, minutes from the bank's January 28 and 29 meeting revealed. The policy board voted 5-4 to apply -0.1% interest rate on current accounts that financial institutions maintain at the bank. The board said it will cut the rate further into negative territory, if necessary.
At the meeting, the bank also voted to hold its target of raising the monetary base at an annual pace of about JPY80 trillion. The negative rate will affect only a portion of current accounts as it adopts a three-tier-system, including quantity, quality and interest rates.
Meanwhile, home prices in majority of the Chinese cities increased in February, figures from the National Bureau of Statistics showed. On a monthly basis, house prices rose 47 cities out of 70 surveyed by the government. It fell in 15 cities and remained flat in 8 cities. Compared with the same month of last year, house prices grew in 32 cities out of the 70 cities in February, while it dropped in 37 cities.
In the economic calendar Friday, eurozone labour cost is due at 1000 GMT and the Bank of England's quarterly bulletin at 1200 GMT. In the afternoon the focus will be on US central bankers. William Dudley, the president of the New York Federal Reserve, will make a speech at 1300 GMT. Boston Fed President Eric Rosengren speaks at 1500 GMT and St Louis Fed President James Bullard at 1800 GMT.
In terms of US data there is the Reuters/Michigan US Consumer Sentiment Index at 1400 GMT, and the Baker Hughes US oil rig count is at 1700 GMT.
Already released, Germany's producer prices declined at a faster-than-expected pace in February, data from Destatis showed. The producer price index fell 3.0% year-on-year in February, exceeding economists' expectations for a 2.6% decrease. In January prices had dropped 2.4%. The measure has been falling since August 2013. The annual decline in February was largely driven by a 9.4% plunge in energy prices.
By Daniel Ruiz; danielruiz@alliancenews.com
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