FTSE remains flat as traders wait for after hours US Fed interest rate call
Markets barely moved as investors remained cautious over whether the Central Bank would follow President Trump’s advice and cut rates
International events tend to dominate movements on the FTSE 100, and Wednesday was no different – with traders waiting patiently for the US Federal Reserve’s latest interest rates decision.
But, with the announcement not coming out until Wednesday evening, the London market had already closed, meaning caution dominated and traders sat on their hands.
As a result, the FTSE 100 barely moved, closing the day out down just 6.35 points at 7,314.05.
— Donald J. Trump (@realDonaldTrump) September 12, 2019
European Central Bank, acting quickly, Cuts Rates 10 Basis Points. They are trying, and succeeding, in depreciating the Euro against the VERY strong Dollar, hurting U.S. exports.... And the Fed sits, and sits, and sits. They get paid to borrow money, while we are paying interest!
Thursday brings the Bank of England’s latest rates decision, although most expect it to remain at 0.75%, while the US Fed has faced heavy criticism from President Donald Trump for not cutting rates sooner.
Fiona Cincotta, senior market analyst at City Index, said: “The FTSE drifted through the session on Wednesday, lacking direction, as investors opted to sit on the side-lines ahead of the Federal Reserve rate decision announcement.”
There was some movement in the oil markets as Prince Abdulaziz bin Salman, Saudi Arabia’s energy minister, gave an update on production at its two sites that were attacked over the weekend.
He said the Kingdom had restored half of the lost production and would fully restore output by the end of September. Full production capacity of 12 million barrels a day would not be available until the end of November, he added.
The news was enough to convince traders, as a barrel of Brent Crude fell 1% to 63.90 dollars a barrel – just two dollars about the pre-attack levels.
David Madden, market analyst at CMC Markets UK, explained: “Seeing as the Saudi Arabian government has invited the UN to investigate the attack, volatility is likely to taper off, as the oil rich nation appears to be going down the political route.”
The pound slid slightly against the euro and the dollar on the back of weaker-than-expected inflation statistics. A pound fell 0.09% against the euro to 1.1280 and it fell against the dollar by 0.16% to 1.2480.
In company news, Kingfisher was the biggest faller on the FTSE 100 after bosses revealed the B&Q owner suffered a 12.5% fall in half-year pretax profits to £245 million.
The group said the UK performance and that of its operations in France were “disappointing” and cautioned the outlook for the rest of the year was mixed across the group, sending shares down to 195.15p – a fall of 6.35p.
Car dealership business Pendragon revealed it would cut around 300 jobs and 20 Car Store showrooms as it warned over steep annual losses.
The loss-making sites will be closed by the end of the year, affecting nearly two thirds of the Car Store chain, with just 12 of 34 showrooms set to remain after the cull. Shares fell 1.12p to 9.8p.
Eddie Stobart Logistics confirmed that former Stobart Group boss Andrew Tinkler has entered the fray to snap up the troubled haulage firm – the second interested party after shareholder DBAY confirmed it was also looking at a possible bid. Eddie Stobart shares remain suspended over an accounting issue.
The biggest risers on the FTSE 100 were International Consolidated Airlines Group up 8.4p at 450p; Hamla up 29p at 2,019p; TUI up 11.4p at 853p; SSE up 15.5p at 1,228p and Severn Trent up 24p at 2,102p.
The biggest fallers were Kingfisher down 6.35p at 195.15p; Burberry down 55p at 2,120p; 3I Group down 25p at 1,113.5p; St James’s Place down 18.4p at 979.4p and Taylor Wimpey down 3p at 160.55p.