LONDON (Alliance News) - Shares in London are seen down on Thursday, tracking a negative close in US and losses in Asian stock trading, with the market focus on the interest rate decision by the Bank of England at 1200 GMT, amid company updates from Sports Direct, Whitbread and others.
As the US Federal Reserve and the European Central Bank head in opposite directions on monetary policy, analysts expect the BoE to remain in the middle, leaving unchanged its monetary policy at its regular meeting. That would mean holding interest rates at 0.5%, the same level they have been at since 2009, and the asset purchase programme at GBP375.0 billion
However, some observers think the BoE will try to "rein in" market expectations that there will be no UK interest rate increase until 2017, as a hike still could come in 2016.
"The main interest may lie around any commentary on recent movements in market interest rates, notably the market-implied timing of a tightening in Bank Rate," says Lloyds Bank. "Having been pulled in somewhat after the ECB's policy loosening last week, one hike is fully priced around the turn of the year, later than on our central view of August 2016."
Oanda senior market analyst Craig Erlam comments: "Alongside the decision we'll also get the minutes and voting from the meeting which provides additional insight into just how close policy makers are to raising rates and what may currently be standing in their way."
Erlam expects well-known hawk Ian McCafferty to cast again the sole vote for a rate hike on Thursday, "but it will be interesting to see if anyone else within the committee is close to joining him". That would mean the 8-1 vote also would remain unchanged.
IG says futures indicate the FTSE 100 index to open at 6,094.70 points. The index closed down 0.1% at 6,126.68 on Wednesday despite a rebound in commodity stocks, as miners experienced sharp gyrations before ending higher and oil companies closed among the best performers even though crude prices remained around lowest level in seven years.
Brent crude is quoted at USD40.43 a barrel before the London open Thursday, while US benchmark West Texas Intermediate is quoted at USD37.39 a barrel. Gold is priced at USD1,073.28 an ounce ahead of the open.
In Asia on Thursday, the Japanese Nikkei 225 index closed down 1.3%. In China, the Shanghai Composite ended down 0.5%, while the Hang Seng index in Hong Kong is down 0.4%.
In New York on Wednesday, the DJIA finished down 0.4%, the S&P 500 down 0.8% and the Nasdaq Composite down 1.5%.
In the economic calendar, alongside the BoE decision, the UK goods trade balance is due at 0930 GMT. In the US, initial and continuing jobless claims are due at 1300 GMT, while US import and export price indices are due at 1330 GMT.
Sports Direct International posted a 25% rise in interim pretax profit despite revenue only ticking up slightly, mainly due to a big increase in investment income and a better gross margin, while it also briefly responded to claims made about the treatment of its warehouse staff.
The FTSE 100-listed sports clothing and equipment retailer said its pretax profit for the 26 weeks to October 25 was GBP187.3 million, up 25% from the GBP149.7 million it made a year earlier, mainly due to the group booking a big gain on its investment income. The company also saw its gross margin improve, up to 44.9% from 44.0% a year earlier.
On Wednesday, the company faced accusations made by The Guardian that temporary staff working at its large warehouse operation in Derbyshire are effectively being paid below the minimum wage and working under very difficult conditions.
Based on reports from two undercover journalists, the paper said warehouse staff at the group are required to go through a series of searches at the end of each shift, for which they are not paid, yet can have their pay docked for clocking in only a minute late.
Though not directly referencing the article, Sports Direct said it had streamlined security operations at the warehouse in order to cut down waiting times for staff leaving the warehouse and said it complies with all legal working requirements. It noted that no warehouse workers are on so-called 'zero hour' contracts.
Whitbread said its total and like-for-like sales grew in the third quarter, albeit at a slightly slower pace than in the first half, with good performances from its core hotels and coffee chain businesses.
The FTSE 100-listed owner of Premier Inn hotels and the Costa Coffee chain, said its total sales grew 10.4% in the 13 weeks to November 26, its financial third quarter, with like-for-like sales growing 3.5%. For the 39 weeks to the same date, total sales were up 11.1%, while like-for-like sales grew 3.6%.
Premier Inn continued to perform well, with total sales up 11% in the third quarter and like-for-like sales rising 4.7%, while Costa delivered 14% total sales growth and 2.5% like-for-like growth. Premier Inn was helped by a rise in rooms available, with robust sales growth both in London and its regional operations, while Costa continued to benefit from new outlets in the UK and its increasing international presence.
Glencore outlined plans to accelerate its debt reduction and capital preservation measures and to cut its capital expenditure for this year and the next amid the weak commodities market.
The multi-commodities miner and trading house said it will increase its debt reduction and capital preservation measures target to USD13.0 billion, from a previous target of USD10.2 billion, with USD8.7 billion of this either already achieved or locked-in. Glencore said its new net debt target for the end of 2016 is USD18.0 billion to USD19.0 billion, from its previous target of the low twenties of billions.
The group has also further reduced its capital expenditure targets for 2015, down to USD5.7 billion from USD6.0 billion, and for 2016, where the cut is more severe, down to USD3.8 billion from USD5.0 billion.
RBC Capital has cut insurers Lancashire Holdings and Old Mutual to Underperform from Sector Perform, while it downgraded Prudential and St James's Place to Sector Perform from Outperform.
By Daniel Ruiz; danielruiz@alliancenews.com
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Prudential (PRU)
St James's Place (STJ)
Lancashire Holdings (LRE)