Saga Share News (SAGA)

(Alliance News) - Stocks in London gave back some of Tuesday's gains on Wednesday with attention lying fully on the US Federal Reserve in the wake of a dovish shift from the European Central Bank.The FTSE 100 index closed down 39.50 points, or 0.5%, at 7,403.54. The FTSE 250 ended down 66.33 points, or 0.3%, at 19,245.46, and the AIM All-Share closed down 6.03 points, or 0.6%, at 932.06.The Cboe UK 100 ended down 0.7% at 12,552.92, the Cboe UK 250 closed down 0.4% at 17,249.94, and the Cboe Small Companies ended 0.2% higher at 11,661.70.In European equities on Wednesday, the CAC 40 in Paris ended up 0.1%, while the DAX 30 in Frankfurt lost 0.1%. On Tuesday, the CAC 40 gained 2.3% while the DAX 30 added 2.2%. "Equity markets in Europe are mixed as traders look forward to the Federal Reserve meeting. The is likely to be the more important of the two updates. Rates are expected to remain on hold. Judging by the drive lower in US government bond yields recently, traders are anticipating dovish language from the Fed," said CMC's David Madden.Yesterday, European indices were boosted by dovish comments from European Central Bank President Mario Draghi. Draghi, speaking in Portugal, raised the possibility of more stimulus should the economic outlook not improve and inflation not pick up in the eurozone.Eyes now look towards another central bank, the US Federal Reserve. The Fed will announce its latest policy decision at 1900 BST, followed by a press conference with Fed Chair Jerome Powell at 1930 BST on Wednesday.The US central bank is expected to keep interest rates unchanged once again, but to provide ever-stronger signals that a cut is fast approaching.At the bank's last meeting in May, the Fed kept interest rates unchanged for a third consecutive meeting.In the accompanying statement, the US central bank said the labour market remains strong but pointed towards slower first-quarter growth in household spending and business fixed investment.Prior to the Fed's meeting, Wall Street was mixed at the London equities close, with the Dow Jones up 0.2%, the S&P 500 up 0.1%, and the Nasdaq Composite flat. Madden added: "The major [US] indices are mixed as the countdown to the Fed meeting begins. A portion of the rally in stocks recently has been on the back of the belief that the Fed will drops hints that rates will be lowered later this year. Some traders are overlooking the fact that the jobless rate is at a 50 year low and earnings are healthy, so the Fed might not be as dovish as some investors are predicting."Ahead of the UK's own interest rate decision, due on Thursday, official data showed inflation was in line with the Bank of England's target in May.The consumer price index rose 2.0% year-on-year in May, slower than April's 2.1% rise but in line with consensus forecasts, as cited by FXStreet. The Bank of England targets a 2.0% inflation rate for the UK.As for the central bank itself, analysts expect it to cling to its hawkish bias on Thursday, albeit with a softened tone, even as rate hike expectations evaporate due to Brexit worries and global trade tensions. The BoE will announce its latest monetary policy decision, alongside the release of the Monetary Policy Committee meeting minutes, at midday on Thursday. There will be no press conference with BoE Governor Mark Carney following the decision.It is widely expected the nine-strong MPC will vote to maintain the UK Bank Rate at 0.75%."As central bank bonanza week continues and once the Fed rate announcement is in the rear-view mirror, attention will shift towards the BoE's rate decision tomorrow," said CityIndex's Fiona Cincotta. "The BoE are not expected to hike rates; however, they might talk up the probability of a rate hike later this year. Even as central banks around the globe, such as the ECB, the RBA and now potentially the Fed are adopting a more dovish stance towards monetary policy, the BoE could show themselves to be the odd ball with a shift towards a less dovish stance."In the UK, the pound was quoted at USD1.2632 at the London equities close Wednesday, higher compared to USD1.2551 at the close on Tuesday."Given that market expectations of a rate hike have completely flattened off, there is a good chance that the BoE will continue hinting towards rate hike later this year. Michael Saunders could even vote in favour of an immediate rate hike. The question is whether pound traders will buy into this talk? The reality is the timing of a hike this year looks close to impossible and a general election more likely," added Cincotta.In London, blue chip miner Rio Tinto was among the FTSE 100's biggest losers, shedding 4.7%, after lowering its iron ore shipment guidance for Pilbara operations due to a higher than expected proportion of certain lower grade products. The miner said it is currently experiencing operational challenges, particularly in the Greater Brockman hub in Pilbara, Western Australia, which is resulting in an increased proportion of certain lower grade products.Rio Tinto now expects 2019 Pilbara shipments between 320 million tonnes and 330 million tonnes, versus previous guidance of between 333 million to 343 million. The company also expects to revise its unit cost guidance in its second quarter operations review, scheduled for July 16.Fellow miners Evraz, Anglo American, BHP were off following the news, slipping 3.4%, 2.0% and 2.1%, respectively.Airlines easyJet and International Consolidated Airlines ended the session 3.8% and 3.2% lower respectively, after HSBC cut the stocks to Reduce from Hold, believing European airlines will follow Lufthansa's profit warning. Ryanair ended down 0.5% and Wizz Air lost 1.0%. Fund supermarket Hargreaves Lansdown closed the session 2.7% lower the company's Chief Executive Chris Hill "expressed his regret" Tuesday for the "distress, uncertainty and inconvenience" caused by fund manager Neil Woodford freezing redemptions from his funds. Hill, replying to a letter from chair of the UK Treasury Committee, Conservative MP Nicky Morgan, said 133,769 Hargreaves' customers are directly exposed to the LF Woodford Equity Income Fund, with about GBP1.09 billion of assets invested in the fund. Morgan said Hargreaves has been "closely linked" with Woodford's funds, as they were in Hargreaves' Wealth 50 list. The FTSE 100-listed fund supermarket creates lists of the best performing funds in the UK. Up until Woodford suspended his equity funds, Hargreaves had LF Woodford Equity Income Fund and Woodford Income Focus Fund on its Wealth 50 list.Morgan, who wrote to Hill last Tuesday, wanted to know if Hargreaves was aware of an increase in inflows to funds in its Wealth 50 list, and if Hargreaves was able to secure discounts for its customers investing in those same funds.Hill stressed that there is "no commercial conflicts of interest".In the FTSE 250, lender CYBG ended the day the best performer, rising 5.1% after affirming its guidance for 2019, and saying its rebrand as Virgin Money UK will be completed by the end of the year. CYBG has unveiled a range of new targets, reaffirming guidance for its year ending September 2019 of a net interest margin of 165 basis points to 170 basis points, with the margin at 172 basis points at December 31, the end of CYBG's first quarter.By the end of financial 2022, CYBG is targeting GBP200 million of net cost savings, operating costs of less than GBP780 million, and a cost to income ratio in the mid 40%s.CYBG wants a lending mix of around 75% mortgages, 15% business, and 10% unsecured, as well as a cost of risk below 30 basis points. It is also targeting a common equity tier 1 ratio of around 13% by financial 2022.At the end of its year finished September 2018, CYBG's cost to income ratio was 112%, from 69% the year before. Its cost of risk was 12 basis points, and CET1 ratio 10.5%. Languishing at the bottom of the midcap index was over-50s insurance and travel company Saga, losing 12%. Saga said trading has been broadly in line with expectations but its Tour Operations unit has been hurt by "current political uncertainties". Saga said travel market conditions are "very competitive" and have suffered from "current political uncertainties". As a result, Tour Operations booked revenue for Saga's financial year to January 31 were down 4% as at June 15 versus the year before. Moreover, Tour Operations margins have been hit by competitive discounting."The company is in a sticky mess and is now reliant on flawless execution to try and put the business back on track," said Russ Mould, investment director at AJ Bell.He continued: "With outgoing CEO Lance Batchelor not scheduled to leave the business until January next year, it is quite a long wait for a new leader to be appointed and steer the company in a healthier direction."Ted Baker shed 8.9% after HSBC cut the fashion retailer to Hold from Buy.Thursday's UK corporate calendar has full year results from Dixons Carphone and a first quarter update from N Brown. The euro stood at USD1.1217 at the European equities close Wednesday, up from USD1.1193 at the same time on Tuesday.In commodities, Brent oil was quoted at USD61.98 a barrel at the London equities close Wednesday, down from from USD62.56 late Tuesday.Gold, meanwhile, was quoted at USD1,344.50 an ounce at the London equities close Wednesday against USD1,347.87 at the close on Tuesday.In the economic calendar on Thursday, the Bank of Japan will be releasing its own interest rate decision at 0300 BST. There is UK retail sales at 0930 BST. In the US, continuing and initial jobless claims are due at 1330 BST. London Close is available to subscribers as an email newsletter. Contact info@alliancenews.com