(Alliance News) - Stocks in London were mixed at midday on Wednesday as investors tentatively look to the two-day economic symposium hosted by the Kansas City Federal Reserve on Thursday.
Federal Reserve Chair Jerome Powell will deliver a speech at the annual Jackson Hole symposium on the central bank's long-awaited monetary policy framework review, which has focused on a new inflation strategy.
The Fed has spent all of 2019 and much of this year conducting its first comprehensive framework review. In his speech, Powell is expected to outline the central bank's most strenuous efforts to spur inflation back to a healthy level.
In addition, investors are hopeful Powell will endorse an "average inflation targeting" policy.
"The focus looks set to shift from US-China trade and vaccine hopes towards the Fed and central banks, with the Jackson Hole Symposium coming into play. For the first time in its history, the town itself will fall quiet, yet there are hopes we will nonetheless see fireworks as markets look for guidance on the next stage of the recovery," said IG Group's Josh Mahony.
"The Fed may have ruled out any short-term shift towards further easing measures, but there are hopes Powell will lay the groundwork for a fresh average inflation targeting policy. Such a move would allow loose monetary policy for longer, with the recent decline in the dollar highlighting the potential for a somewhat dovish tone from the Fed," Mahony added.
In London, the blue-chip FTSE 100 index was down 13.25 points, or 0.2%, at 6,023.76. The mid-cap FTSE 250 index was up 76.32 points, or 0.4%, at 17,654.31. The AIM All-Share index was flat at 961.54.
The Cboe UK 100 index was down 0.3% at 599.69. The Cboe 250 was up 0.5% at 15,015.68. The Cboe Small Companies was up 0.1% at 9,472.65.
In mainland Europe, the CAC 40 index in Paris was up 0.1%, while the DAX 30 in Frankfurt was up 0.2%.
"The market is eager for guidance on how the Fed might push inflation higher and what that means for monetary policy going forward. Powell may well say the Fed will keep its policy as accommodative as possible until inflation and employment has strengthened. Equities are unlikely to move too much until the speech is made, but afterwards we could see a sharp increase in trading activity on the markets as investors get a clearer picture of the Fed's intentions," said AJ Bell's Russ Mould.
In the FTSE 100, Aveva Group was up 3.5%. The industrial software company was extending gains from Tuesday after announcing it had agreed to buy US rival OSIsoft for USD5 billion. The stock closed up 7.3% on Tuesday.
At the other end of the large caps, Polymetal International was down 0.5% despite the Russian gold miner reporting a strong financial performance in the first half of the year amid a challenging global backdrop.
Gold miners have benefited from a sharp rise in the gold price which is up 27% so far in 2020. The precious metal was trading at USD1,919.28 an ounce Wednesday midday, flat from USD1,918.27 late Tuesday.
For the six months to June 30, Polymetal's revenue was up 21% to USD1.14 billion from USD941 million last year and net earnings more than doubled to USD381 million from USD153 million.
It declared an interim dividend of USD0.40, twice as high as USD0.20 paid out last year.
Looking ahead, Polymetal said it remains on track to meet 2020 production guidance of 1.5 million ounces of gold equivalent and kept its full-year all-in-sustaining cash cost guidance in a range between USD850 to USD900 per ounce.
In the FTSE 250, Provident Financial was the best performer, up 20%, as investors looked past the subprime lender scrapping its dividend.
For the six months ended June 30, Provident Financial swung to a pretax loss of GBP28 million from a profit of GBP43.1 million a year prior. This was as revenue fell 11% to GBP445.6 million from GBP501.5 million.
The Bradford, England-based company blamed the swing to loss on lower revenue and higher impairment charges of GBP240.3 million, from GBP165.9 million a year before, due to the Covid-19 pandemic. However, it said its performance was better than its expectations at the start of the lockdown in March.
No interim dividend was declared, compared to 9.0p paid for the first half of 2020, as Provident said it needs to preserve capital and provide financial stability. However, it said it intends to resume dividend payments to shareholders as soon as financial conditions normalise.
Looking ahead, the doorstep lender noted that since the end of June, there were some encouraging signs of increased activity levels in its markets, with improving customer demand and spending trends evident.
Inchcape was up 5.0% after JPMorgan raised the car dealer to Overweight from Neutral.
WH Smith was up 4.0% after Goldman Sachs started coverage on the books and stationery retailer with a Buy rating.
The dollar was lower against major counterparts with trepidation ahead of Powell's keynote speech on Thursday.
The pound was quoted at USD1.3150 Wednesday midday, up from USD1.3123 at the London equities close Tuesday.
The euro stood at USD1.1819 Wednesday midday in London, flat from USD1.1818 at the European equities close Tuesday. Against the yen, the dollar was trading at JPY106.21, lower than JPY106.50.
"Investors and traders will start to align their positions, which will only add volatility to the USD and across the board with risk," analysts at OFX said.
Brent oil was quoted at USD45.88 a barrel Wednesday midday, flat from USD45.83 at the London equities close Tuesday, as oil producers brace for Hurricane Laura.
The storm is forecast to reach the Texas or Louisiana coast on Wednesday night. Storm surges could reach up to 14 feet in places and will be accompanied by "large and destructive waves," according to the National Hurricane Center.
Laura threatens the major oil refining centers of Lake Charles, Louisiana and Beaumont-Port Arthur, Texas, located near the coast.
New York is pointed to a mixed open after the S&P 500 and Nasdaq Composite indices once again ended at record highs on Tuesday.
The Dow Jones Industrial Average was called down 0.2%, the S&P 500 flat and the Nasdaq Composite up 0.2%, based on futures trading.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
