LONDON MARKET OPEN: BT and Vodafone rise after UK 5G spectrum auction

Wed, 17th Mar 2021 08:46

(Alliance News) - Stock prices in London opened lower on Wednesday ahead of the US Federal Reserve's interest rate decision, while telecommunications firms were higher after Ofcom revealed the results of its latest auction.

The FTSE 100 index was down 4.84 points, or 0.1%, at 6,798.77. The mid-cap FTSE 250 index was down 81.64 points, or 0.4%, at 21,684.28. The AIM All-Share index was 0.3% lower at 1,203.66.

The Cboe UK 100 index was flat at 677.32. The Cboe 250 was down 0.4% at 19,318.66, and the Cboe Small Companies up 0.1% at 13,968.44.

In mainland Europe, the CAC 40 in Paris was 0.1% lower, while the DAX 30 in Frankfurt was flat.

In the FTSE 100, Rolls-Royce was the best performer, up 3.3%, after JPMorgan raised the jet engine maker to Neutral from Underweight.

BT was up 3.0% after the telecommunication firm's EE mobile unit secured a new 700 megahertz and 3.6 to 3.8 gigahertz spectrum for GBP452 million, following the principal stage of UK telecoms regulator Ofcom's 5G auction.

Vodafone was up 1.5% after the telecommunications firm won 40 megahertz in the 3.6 to 3.8 gigahertz band for GBP176.4 million.

Ofcom said the total revenue raised from the principal stage is GBP1.36 billion with all funds to be paid to the UK HM Treasury.

Hargreaves Lansdown was up 2.8% after the fund supermarket said trading in January had been similar to previous lockdown periods, with strong dealing volumes, significant engagement from clients, and robust net new business and net new client numbers.

The retail investment platform said it continued to see elevated volumes of trading since the end of January, with an increased proportion of that directed towards international equities - driven by interest in US stocks from existing clients.

As a result, Hargreaves Lansdown expects pretax profit for the financial year ending June 30, to be modestly above the top end of analyst expectations.

The current range of company-collected analyst expectations for financial 2021 pretax profit is between GBP334 million and GBP360 million. Hargreaves posted pretax profit of GBP378.3 million in financial 2020.

Standard Chartered was 1.5% higher after HSBC upgraded the Asia-focused bank to Buy from Hold.

Ahead, the Federal Open Market Committee will conclude its two-day policy meeting on Wednesday and announce its decision at 1800 GMT. This will be followed by a press conference with Fed Chair Jerome Powell at 1830 GMT.

Powell has made it clear the US central bank will wait until employment has recovered and inflation is securely above 2.0% before it will roll back its easy-money policy.

Members of the policy-setting FOMC are expected to raise the economic projections they made in December to take into account the US stimulus and improving outlook since then.

Richard Hunter, head of markets at interactive investor, commented: "The Fed is expected to raise its forecasts for economic growth but at the same time retain its accommodative stance. Its previous assertion that the current inflation effect is transitory will need to be reiterated in order to avoid further uncertainty in the bond markets while for equities, any hint of a rise in interest rates earlier than expected would be unsettling.

"While the current consensus is that rate rises are unlikely before 2023, the recent rise in inflation expectations will need to be addressed in view of more recent economic data suggesting that an economic recovery is already under way."

The Fed's meeting comes ahead of other central bank meetings later this week, with the Bank of England announcing its policy decision on Thursday and Bank of Japan on Friday.

The Japanese Nikkei 225 index closed flat. In China, the Shanghai Composite ended flat, while the Hang Seng index in Hong Kong finished 0.1% lower.

The pound was quoted at USD1.3912 on Wednesday morning, up from USD1.3886 at the London equities close Tuesday.

The euro was priced at USD1.1900, up sightly from USD1.1894. Against the yen, the dollar was trading at JPY109.12, marginally higher from JPY109.02.

Brent oil was quoted at a USD68.84 barrel early Wednesday, higher against USD68.28 late Tuesday. Gold was trading at USD1,736.07 an ounce, up from USD1,729.46.

The economic events calendar on Wednesday has eurozone consumer price data at 1000 GMT.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com