LONDON MARKET OPEN: Stocks Lower After US Fed, Eyes Now Turn To BoE

(Alliance News) - Stocks in London on Thursday traded lower following "disappointment" from the US Federal Reserve, with focus now turning to the Bank of England's latest policy decision at midday.

Among the stocks dragging on the blue-chip index was retailer Next, down after reporting a slow start to Autumn trade and its guidance coming with the "caveat" of Brexit.

The FTSE 100 was down 7.72 points, or 0.1%, at 7,306.33 early Thursday. The FTSE 250 down just 5.05 points at 20,049.38 while the AIM All-Share was up 0.1% at 885.06.

The Cboe UK 100 index was down 0.2% at 12,389.98. The Cboe UK 250 was down 0.2% at 17,945.09, and the Cboe UK Small Companies also 0.2% lower at 10,935.33.

In mainland Europe, the CAC 40 in Paris and DAX 30 in Frankfurt were up 0.1% and flat, respectively, in early trade on Thursday.

"European markets and US futures are trading lower as traders are showing disappointment in the Fed's ability to please the market," said Naeem Aslam at ThinkMarkets.

"Last night, the Federal Reserve delivered on its promise; it cut the interest rate by 25 basis points. But the discontent for the markets was in Jerome Powell’s message which clearly gave a strong signal that only moderate rate cuts are likely to take place from here onwards," Aslam explained.

The US central bank cut its benchmark interest rate for the second time this year on Wednesday, and Federal Reserve Chair Powell vowed to do whatever is needed to keep the economy growing.

But the Fed's policy committee is divided, with three of 10 voting members dissenting from the decision, one because he wanted even more stimulus.

Hot on the heels of the Fed, the Bank of England announces its latest monetary policy decision at midday. There will be no press conference with BoE Governor Mark Carney following the decision.

"The Bank of England is unlikely to announce a policy change today. Given ongoing uncertainties, the Monetary Policy Committee is likely to continue to sit on the sidelines," said Lloyds Banking, adding that it expects a unanimous vote for unchanged policy, with Bank Rate remaining at 0.75%.

Another monetary policy decision overnight came from Japan, with the central bank deciding to maintain its ultra-easing monetary policy despite other central banks cutting interest rates to prop up growth.

"Japan's economy has been on a moderate expanding trend, with a virtuous cycle from income to spending operating, although exports, production, and business sentiment have been affected by the slowdown in overseas economies," the Bank of Japan said in a statement issued after a two-day monetary policy meeting.

In Asia on Thursday, the Japanese Nikkei 225 index ended up 0.4%. In China, the Shanghai Composite closed up 0.5%, while the Hang Seng index in Hong Kong is down 1.4%.

At the bottom of London's FTSE 100 was Next, down 4.9% after reporting a good interim online sales performance but commenting that Autumn trading has been "disappointing".

Group sales for the six months to July 2 rose 3.7% to GBP2.06 billion, with Online up 13% to GBP1.00 billion and Retail falling 5.5% to GBP874.3 million. Next's pretax profit was up 4.0% to GBP327.4 million, and on an underlying basis, pretax profit was up 2.7% to GBP319.6 million.

Next said the first few weeks of Autumn trading have been "disappointing", but it believes this is more due to warmer weather than usual rather than dampened consumer confidence in the UK.

On the Brexit front, Next commented: "At this time, it is impossible to predict whether the UK will leave the EU with or without a deal and equally difficult to predict the effect no-deal might have on the wider UK economy. So, our guidance comes with one important caveat: we have not accounted for the possible positive effects of a deal or possible negative effects of a no-deal Brexit."

United Utilities was down 2.0% after Jefferies cut the water works to Underperform from Hold.

Spirits maker Diageo was down 1.0% after saying its financial year ending June 2020 has begun well, with organic net sales growth guided at the mid-point of its 4% to 6% range. Organic operating profit is set to be one percentage point ahead of organic sales growth.

However, due to a strong comparable a year prior, Diageo sees first-half organic operating profit growth to either match, or be slightly slower than, organic net sales growth.

In the FTSE 250, IG Group Holdings was up 5.3% as it reported flat revenue for the three months to August 31, its first quarter, at GBP129.1 million. Stock trading & investment revenue was up 9%, the core OTC leveraged flat, and exchange trade derivatives down 2%.

IG also said the search for a new chair is "at an advanced stage", with the preferred candidate now identified. IG is now securing the relevant regulatory approvals.