LONDON MARKETS: FTSE 100 Edges Up As Fed Decision Takes Center Stage
September 20 2017 - 4:32AM
Dow Jones News
By Carla Mozee, MarketWatch
Retail shares gain ahead of monthly sales update
U.K. stocks edged higher Wednesday as retail shares gained ahead
of a monthly sales update, with investors focused on the U.S.
Federal Reserve policy decision due later.
The FTSE 100 index trudged up 0.1% to 7,282.85, with the
consumer services, oil and gas, and financial groups advancing. But
consumer goods, basic materials and health care stocks dipped into
the red. On Tuesday, the London benchmark rose 0.3%.
(http://www.marketwatch.com/story/ftse-100-gets-a-lift-from-supermarket-stocks-softer-pound-2017-09-19)
Shares of Kingfisher PLC (KGF.LN) , whose brands include
Screwfix, jumped 6% to lead in price performance Wednesday. The
home improvement retailer said it is on track to meet targets in
the second year of its five-year restructuring plan, as it raised
its dividend. But Kingfisher's first-half profit fell 6%
(http://www.marketwatch.com/story/kingfisher-pretax-profit-hurt-by-weak-french-sales-2017-09-20),
and it stayed cautious in its outlook for its core U.K. and French
markets.
Retail sales in store: U.K. retail sales figures for August
should signal how well consumers are holding up, with the report
set for release by the Office for National Statistics at 9:30 a.m.
London time, or 4:30 a.m. Eastern Time. Analysts polled by FactSet
expect a 1.2% increase in sales on the year.
"Retail sales have been unusually volatile in 2017, but beneath
the noise, there is a clear slowdown in growth underway, consistent
with other measures of consumer spending and the real income
squeeze underway as a result of rising import prices. Today's
August data should be consistent with that underlying trend," said
Adam Cole, chief currency strategist at RBC Capital Markets, in a
note.
Ahead of the report, shares of department store chain Marks
& Spencer Group PLC (MKS.LN) were up 0.8%, and apparel and home
furnishings seller Next PLC (NXT.LN) picked up 0.4%.
Fed ahead: The U.S. Federal Reserve is widely expected to say it
will start reducing its $4.5 trillion portfolio of government
securities in its policy decision later Wednesday. An interest-rate
hike isn't expected at the end of the central bank's two-day
meeting, and investors only see a 56% chance the Fed will raise
rates in December
(http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html/),
according to CME Group.
"According to their last projection, the Fed expected seven rate
hikes by the end of 2019. However, in the new forecast, the market
is widely expecting them to drop one interest rate hike," said
Naeem Aslam, chief market analyst, at ThinkMarkets UK, in a
note.
"Anything which deviates from the Fed's plan would spark concern
for the markets. We do think that another rate hike by the end of
this year still has 40% chance, however the upcoming economic data
is going to keep traders on their toes, due to the massive
footprints of hurricanes," he said, referring to the recent
Hurricanes Irma and Harvey.
The Fed policy decision is due at 7 p.m. London time, or 2 p.m.
Eastern Time. The pound bought $1.3536 compared with $1.3511 late
Tuesday in New York.
Stock movers: Babcock International Group PLC (BAB.LN) shares
drove up 2.3% after the infrastructure support company backed its
fiscal 2018 forecast
(http://www.marketwatch.com/story/babcock-international-reiterates-fy-2018-outlook-2017-09-20).
Diageo PLC (DEO) shares fell 1.8% after the liquor maker said it
expects first-half organic sales growth to be hit by the later
timing of the Chinese New Year
(http://www.marketwatch.com/story/diageo-sales-to-be-hit-by-later-chinese-new-year-2017-09-20)
and by the expected impact of a ban on selling alcohol along
highways in India.
(END) Dow Jones Newswires
September 20, 2017 04:17 ET (08:17 GMT)
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