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(Alliance News) - Stock prices in London closed subdued on Wednesday amid expectations of a further US interest rate cut later in the day, despite the largest economy in the world reporting stronger-than-expected economic growth.
The FTSE 100 index closed up 0.3% at 7,330.78 Wednesday. The mid-cap FTSE 250 index closed down 0.3% at 20,115.10. The AIM All-Share index closed 0.1% lower at 889.80.
The Cboe UK 100 closed up 0.5% at 12,435.12, the Cboe UK 250 down 0.2% at 18,057.91, and the Cboe UK Small Companies down 0.1% at 11,226.09.
The pound was quoted at USD1.2866 at the London close, lower from USD1.2887 late Tuesday.
Data from the US Bureau of Economic Analysis showed that gross domestic product grew 1.9% in the third quarter of 2019 on the year prior. This was slower than the 2.0% reported in the second quarter, but exceeded the 1.7% growth forecast by a FXStreet-compiled consensus.
The bureau explained the pace of growth slowed amid deceleration in personal consumption expenditure and government spending.
"The 1.9% annualised gain in third-quarter GDP, down only marginally from the 2.0% gain in the second, was a little stronger than we had expected," Capital Economics Senior US Economist Andrew Hunter said. "But it still pushed the economy's annual growth rate down to a near three-year low of 2.0% and should be enough to convince Fed officials to deliver another 25 basis points interest rate cut later today."
Later on Wednesday, the US Federal Reserve will announce its interest rate decision at 1800 GMT.
According to the closely-watched CME FedWatch Tool, economists believe there is a 99.5% probability of the Federal Open Market Committee cutting rates to a range of 1.50% to 1.75% from the current 1.75% to 2.00% range with the remainder expecting a cut to between 1.25% and 1.50%.
"The real uncertainty lies in the tone of the post-meeting statement and press conference," Western Asset Portfolio Manager John Bellows said. "We think the Fed will reiterate the dovish arguments that have led to the interest rate cuts this year. That includes an emphasis on 'sustaining the expansion', a discussion of slowing growth, and an admission that inflation is too low."
"These dovish points would come as a surprise to analysts who are expecting a more hawkish message, and certainly would surprise anybody expecting a strong signal from the Fed that it is done cutting," Bellows added.
On Wall Street, the Dow Jones was trading 0.1% higher, the S&P 500 down 0.3%, whilst the Nasdaq was down 0.1%.
In local news, UK Prime Minister Boris Johnson said he is prepared for a "tough" general election battle after members of Parliament cleared the way for the first December poll in almost a century.
Following his Commons victory on Tuesday – at the fourth time of asking – Johnson sought to rally his ruling Conservative MPs ahead of the election on December 12.
The Conservatives go into the campaign in buoyant mood, with one opinion poll at the weekend putting them 16 percentage points ahead of the opposition Labour party.
Amongst the blue chips moving in London, emerging markets-focused lender Standard Chartered closed 2.6% higher after delivering solid third quarter results despite warning of "growing headwinds".
For the three months ended September, pretax profit rose 4% year-on-year to USD1.11 billion, up 16% on an underlying basis. This was after net income climbed 7% to USD3.98 billion amid "broad-based growth" across all business segments and regions.
StanChart warned, however, there are "growing headwinds" such as continued geopolitical tensions as well as an expected slowdown in global economic growth and lower interest rates.
Drugmaker AstraZeneca ended 2.6% higher after it sold the European and Russian commercial rights to schizophrenia and bipolar disorder treatments Seroquel and Seroquel XR to German pharmaceutical firm Cheplapharm Arzneimittel for up to USD239 million.
Both drugs have already lost patent protection in the territories, generating USD108 million in sales in 2018 from those markets.
Fellow pharmaceutical giant GlaxoSmithKline ended 2.4% higher after third quarter profit jumped amid a strong performance in its vaccines unit.
For the three months ended September, pretax profit rose 14% on the year to GBP1.95 billion after revenue rose 16% to GBP9.39 billion.
Revenue performance was particularly helped by strong 20% Vaccines growth, courtesy of higher sales of its shingles vaccine Shingrix, as well as meningitis and flu vaccine contributions.
In the red amongst the blue chips, clothing and homewares retailer Next ended 2.9% lower despite reporting third-quarter full price sales were slightly ahead of guidance and it held its full year outlook.
For the quarter ended October 26, total full price sales were up 2.0% which was "slightly ahead" of guidance given in September.
Retail sales, however, were down 6.3% whilst online sales grew 9.7% and finance interest income up 7.0%. In the year to October 26, total full price sales were up 3.5%.
The UK retail bellwether said it thinks strong sales in July pulled forward sales from August, while sales in September were "adversely affected by unusually warm weather". This was followed by a "significant improvement" in October when temperatures fell and the heavens opened with rain.
In the FTSE 250, ConvaTec Group jumped 11% after the medical devices maker hailed a "solid" third quarter and it held firm to full year guidance.
For the three months ended September, revenue grew 2.4% on the year prior to USD462.9 million with organic growth up 4.6%. Group performance was boosted by growth in all of the company's units - Advanced Wound Care, Ostomy Care, Continence & Critical Care, and Infusion Devices.
The company also said its outlook for 2019 is unchanged, still guiding for organic revenue growth of between 1.0% to 2.5%.
Elsewhere in London, Applied Graphene finished 9.1% higher after it launched a graphene anti-corrosion paint primer into the UK mainstream market through car and cycling products retailer Halfords Group.
Applied Graphene Chief Executive Officer Adrian Potts described the deal as a "landmark moment" for the firm and its products.
Security and surveillance firm Synectics closed 18% lower after it reported its full year results are expected to be "materially" below market expectations amid "difficult" UK market conditions.
In mainland Europe, in Paris the CAC 40 equities index ended up 0.2%, while the DAX 30 in Frankfurt ended down 0.3%.
The euro was quoted at USD1.1122, higher compared to USD1.1108 late Tuesday. The dollar was trading at JPY108.87, broadly unchanged compared to JPY108.91 late Tuesday.
Gold was quoted at USD1,493.92 an ounce at the London equities close, higher versus USD1,488.37 Tuesday.
Brent oil was quoted at USD60.91 a barrel at the London equities close, lower than USD61.86 at the close Tuesday.
In the economic calendar on Thursday, there is China prints purchasing managers index data at 0100 GMT.
The Bank of Japan delivers its interest rate decision ahead of a press conference at 0600 GMT. Japan will also release consumer confidence figures at 0500 GMT.
In Europe, German retail sales figures are released at 0700 GMT with eurozone GDP, CPI and unemployment rate data delivered at 1000 GMT.
In the US, jobless claims figures are printed at 1230 GMT ahead of Chicago PMI at 1345 GMT.
In UK corporate events on Monday, third quarter results are due from oil major Royal Dutch Shell, lender Lloyds Banking Group, British Airways-owner International Consolidated Airlines, drugsmaker Indivior, medical devices maker Smith & Nephew and chemicals firm Elementis. Interim results will come from telecommunications firm BT Group.
By Ahren Lester; ahrenlester@alliancenews.com
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