LONDON MARKET MIDDAY: Stocks Drift And Dollar Dips Ahead Of US Fed

(Alliance News) - London stocks meandered Wednesday with movements muted as markets pause ahead of the latest US interest rate decision, due after the European close.

The FTSE 100 index was down 7.72 points, or 0.1%, at 6,097.82 at midday. The mid-cap FTSE 250 index was down 34.30 points, or 0.2%, at 17,781.08. The AIM All-Share index was up 0.5% at 973.51.

The Cboe UK 100 index was down 0.4% at 607.05. The Cboe 250 was down 0.2% at 15,155.63, and the Cboe Small Companies down 0.3% at 9,490.42.

In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were both up 0.1% Wednesday afternoon.

"European markets are distinctly lacking direction in early trade today, with FTSE gains faltering to bring the index back down into negative territory," said Joshua Mahony, senior market analyst at IG.

"Today's FOMC meeting looks set to provide the main event of the day, with Powell expected to flesh out the new inflation targeting proposed in his Jackson Hole speech. With few expecting any shift in monetary policy, today will be as much about any shift in economic forecasts and the new inflation policy than rates or QE."

The US Federal Open Market Committee will conclude its two-day policy meeting on Wednesday and announce its decision at 1900 BST. This will be followed by a press conference with Fed Chair Jerome Powell at 1930 BST.

The central bank is expected to leave interest rates untouched this week.

Ahead of the Fed announcement, Wall Street was on course for an upbeat start. The Dow Jones Industrial Average was called up 0.3%, the S&P 500 up 0.5% and the Nasdaq Composite up 0.4%.

The dollar, meanwhile, took a step back.

The euro traded at USD1.1876 on Wednesday, up against USD1.1847 late Tuesday. Against the yen, the dollar fell to JPY105.15 from JPY105.48.

Sterling was quoted at USD1.2949 on Wednesday, higher than USD1.2858 at the London equities close on Tuesday.

The UK's annual inflation rate decelerated to 0.2% in August from 1.0% in July. Month-on-month, prices fell by 0.4% in August after 0.4% growth in July.

The Office for National Statistics noted that the UK government's Eat Out to Help Out scheme - which ran in August and discounted meals out up to a maximum of GBP10 per person - pushed down prices in restaurants and cafes, while other downwards contributions came from air fares and clothing prices.

Capital Economics commented: "The sharp drop in CPI inflation in August probably represents the low point for inflation. But a sustained rise to 2.0% seems unlikely within the next few years."

The Bank of England - which targets an inflation rate of 2% - announces its own interest rate decision on Thursday.

Gold was quoted at USD1,966.00 an ounce on Wednesday, higher than USD1,951.10 on Tuesday. Brent oil rose to USD41.24 a barrel from USD40.16 late Tuesday.

In London at midday, Wm Morrison Supermarkets was down 2.3% after being cut to Underweight from Neutral by JPMorgan.

At the top of the FTSE 250 was Energean, up 17%. The gas producer, which has operations in Israel, Greece and the Adriatic region, said its 70%-owned Energean Israel has signed two new gas sales & purchase agreements, which increases the total firm contracted gas sales from Karish project to 7.0 billion cubic metre per year on plateau.

The majority of gas will be supplied to the Ramat Hovav Power Plant, a partnership between the Edeltech Group and Shikun & Binui. The remainder of the gas, represented by a second agreement, will be supplied to an affiliate of the RH Partnership for other existing power stations.

The gas contracts are for a term of up to 20 years and contain provisions regarding floor pricing for the main plateau period and exclusivity. The annual contract quantity reduces after the first seven years following first gas from Karish.

Plus500 slipped back 2.5% despite boasting of an "outstanding performance" so far this year.

The operational momentum achieved during the first half has continued into the second half to date, the contracts for difference technology platform said. Revenue, in particular Customer Income, has remained strong in the second half thus far, while a "high level of new customers" have been onboarded.

"While market conditions remain uncertain, macroeconomic and sector-specific newsflow continue to provide significant trading opportunities for customers. Therefore, the board remains very confident about the outlook for Plus500, particularly given the company's outstanding performance so far this year," said Plus500 in its annual general meeting statement.

Plus500 shares remain up 69% so far in 2020.

Elsewhere in London, Galliford Try was up 4.8% as it posted a narrowed loss for financial 2020 despite a fall in revenue.

Revenue for Galliford Try's financial year ended June 30 was GBP1.12 billion, a 20% decline from GBP1.40 billion recorded the year prior, with the company saying this reflected the business's focus on core sectors and the impact of Covid-19.

Following the sale of the Linden Homes and Partnerships housing divisions to the former Bovis Homes, completed in January, Galliford said it is concentrating on its core strengths of building, highways and environment.

Pretax loss narrowed to GBP34.6 million from GBP64.5 million, although excluding exceptional items the loss widened to GBP59.7 million from GBP17.2 million.

Looking ahead, the Uxbridge-based company said it has continued to trade well and entered the new financial year with an order book of GBP3.2 billion, up from GBP2.9 billion a year before, and 90% of revenue already secured. It said it thinks it has a strong platform for return to profitability in financial 2021.

Outside of the Fed in the international events calendar on Wednesday, there are US retail sales in the afternoon at 1330 BST.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.