LONDON MARKETS: FTSE 100 Hold Gains As BOE Signals Future Rate Cut
September 15 2016 - 10:14AM
Dow Jones News
By Carla Mozee, MarketWatch
Next shares drop after update; retail sales climb in August
U.K. stocks gained ground Thursday, advancing as supermarkets
shares rose, while a fall in the pound after the Bank of England's
policy remarks aided some shares of multinationals.
The FTSE 100 was up 0.3% at 6,691.67, after darting in and out
of positive during the session.
The benchmark rose as the pound dipped below $1.32 after the
Bank of England's Monetary Policy Committee suggested it may
consider further cutting its benchmark interest rate. Sterling fell
to $1.3195 from $1.3236, where it traded before the Bank of England
left its key rate unchanged at 0.25%
(http://www.marketwatch.com/story/bank-of-england-holds-key-rate-at-025-as-expected-2016-09-15-791725).
Weakness in the pound in the wake of the U.K.'s vote in June to
leave the European Union has benefited companies that rake in sales
from overseas. Consumer products makers Reckitt Benckiser Group PLC
(RB.LN) and Unilever PLC (ULVR.LN) each rose 0.6% and tobacco maker
Imperial Brands PLC (IMBBY) rose 0.4%
The Bank of England will update its economic assessment in
November. If "the outlook at that time is judged to be broadly
consistent with the August Inflation Report projections, a majority
of members expect to support a further cut in bank rate to its
effective lower bound at one of the MPC's forthcoming meetings
during the course of this year," the BOE said.
"The U.K. economy is still set to encounter a prolonged period
of uncertainty following the EU referendum outcome. Therefore it
does make sense that the BOE would leave its bias open towards
further monetary easing if the economy does enter a period of
turbulence," Jameel Ahmad, head of market research at FXTM, said in
emailed comments.
Earlier Thursday, the Office for National Statistics said its
retail sales reading rose 6.2%
(http://www.marketwatch.com/story/uk-retail-sales-resilient-despite-brexit-2016-09-15)
in August on a year-over-year basis. That outstripped a FactSet
estimate of a 5.4% increase.
"Retail sales make up less than 20% of gross domestic product.
However, they provide a timely insight to total consumption which
makes up two-thirds of GDP. The continued strong performance of
retail sales in August suits our above consensus call for the
U.K.'s near- and medium-term growth prospects," said Kallum
Pickering, economist at Berenberg, in a note.
Retail updates: Topping the blue-chip lndex was Wm. Morrison
Supermarkets PLC (MRW.LN). Shares rallied 8% as the retail chain
posted a 34% rise in first-half earnings and said it hasn't seen
any changes in customer sentiment
(http://www.marketwatch.com/story/morrisons-profit-up-says-no-hit-from-brexit-2016-09-15)
following the Brexit vote in June.
Shares of supermarket rival Tesco PLC (TSCO.LN) climbed 3%,
while J Sainsbury PLC (SBRY.LN) picked up 1.2%.
But Next PLC (NXT.LN) shares were 4.8% lower. The apparel and
home furnishings retailer said full-price sales in its retail
division were down
(http://www.marketwatch.com/story/next-profit-down-15-as-full-price-sales-fall-2016-09-15)4%
on a like-for-like basis.
Shares of department store Marks & Spencer PLC (MKS.LN) fell
2.5%.
Other movers: Publisher and exhibitions company Informa PLC
(INF.LN) rose 2.7% on its plans to buy Penton Information Services
for GBP1.18 billion pounds
(http://www.marketwatch.com/story/informa-agrees-to-buy-penton-in-118-billion-deal-2016-09-15)
($1.57 billion).
Coca-Cola HBC AG shares rose 3.6% as the bottler was upgraded to
buy from neutral at Credit Suisse.
(END) Dow Jones Newswires
September 15, 2016 09:59 ET (13:59 GMT)
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