• FTSE 100 made a subdued start to trading
• MPC decision in focus, 50bps interest rate rise expected
• Next bootsed by bumper quarter two, shares rise
FTSE 100 was little moved as trading got underway on Thursday with investors staying sidelined ahead of today’s Monetary Policy Committee’s (MPC) interest rate decision.
At 8.30am the FTSE 100 was down 4.68% at 7,441.00 with the broader FTSE 250 also flat, down 11.22 points (0.06%) to 20,007.62.
Market expectations are for the MPC to raise rates by 50bps for the first time since it was set up back in 1997.
Next made early progress with shares up 1.96% to 6,880p after a bumper second quarter prompted the retailer to raise full year profit guidance by £10mln.
Shore Capital analyst, Eleonora Dani, said the results were reassuring after a series of profit warnings in the sector.
She said the strength in retail sales and online was unexpected which led to the upgrade in full year guidance.
“ Next remains a well-managed company with an experienced management team and tight stock and cost control. “ she added.
Glencore PLC (LSE:LON:GLEN) fell 1.29% to 440.50p despite rewarding investors with a special dividend.
It reported a 43% increase in revenue to US$134,435mln in the first half with adjusted EBIT of US$15,415mln, up 191%.
Joshua Warner, Market Analyst at City Index said:
'Glencore has reaped rewards from higher prices for the likes of gas and coal during the first half, which resulted in record earnings and a significant influx of cash for the commodity giant.”
“Net debt has now fallen to nominal levels of just $2.3bn, well below the $10 bn cap set by the company.”
“This gives it plenty of headroom and this, combined with the significant improvement in cashflow, prompted Glencore to top-up shareholder returns by $4.5bn this morning, split into a new $3bn share buyback and a special dividend worth $1.45bn.
Rolls Royce PLC was another early faller with shares slumping 5.26% after it reported a sharp fall in first half underlying operating profits to £125m after taking £371mln of R&D costs.The engineering giant reiterated full year guidance and continues to expect low-to-mid-single digit underlying revenue growth, full year underlying operating profit margin to be broadly unchanged and modestly positive free cash flow in 2022.
7.35am: FTSE seen treading water in early trading
FTSE 100 expected to make a lacklustre start to trading on Thursday with spread betting companies calling the lead index up around 7 points.
Strong gains in the US will provide some support but the focus will be on the Monetary Policy Committee meeting with an interest rate rise of 25bps to 50bps expected.
Michael Hewson Chief Market Analyst at CMC Markets UK commented:
“European markets saw a much more buoyant tone yesterday with the news that US House Speaker Nancy Pelosi had left Taiwan without incident, and better than expected US economic data prompted a similarly strong session for US markets which finished the day strongly higher.”
“This positive finish looks set to see a higher open for markets in Europe, with the focus on the Bank of England rate decision and the latest US weekly jobless claims.”
“Today the Bank of England could make history by raising interest rates by 50bps for the first time since the Monetary Policy Committee was set up back in 1997.”
“Market expectation is that we will get 50bps today.”
Next PLC (LSE:NXT) upped its guidance for full year profit before tax by £10mln today after a bumper second quarter.
Quarter two sales were up 5%, £50mln ahead of previous guidance.
As a result the retailer now expects full year pre-tax profit of around £860mln, an increase of £10mln from previous expectations.
Next expects this to be made up of a £15mln benefit from better than expected first half sales, improved margins with these increases partially offset by some additional costs.
Rolls-Royce Holdings PLC (LSE:LON:RR.) reported underlying first revenues of £5.3bn today led by a recovery in Power Systems and improvement in Civil Aerospace.
But underlying operating profit of £125m was lower including a £371mln R&D cost.
The engineering giant reiterated full year guidance and continues to expect low-to-mid-single digit underlying revenue growth, full year underlying operating profit margins to be broadly unchanged and modestly positive free cash flow in 2022.
6.50am: FTSE 100 seen little changed at Thursday's open
FTSE 100 seen little changed at the open with spread betting companies calling the lead index up around 7 points.
Focus in London will be on the Monetary Policy Committee meeting with an interest rate rise of 25bps to 50bps expected.
US markets closed in positive territory on Wednesday with the Dow Jones Industrial Average up 416 points, 1.3%, at 32,813, the Nasdaq Composite up 319 points, 2.6%, to 12,668, and the S&P 500 up 64 points, 1.6%, to 4,155.
Traders shook off some of the concerns involving Nancy Pelosi's visit to Taiwan, which China had urged her not to make, after she landed Tuesday night.
Asian markets were mixed with the Nikkei 225 rising modestly after The Bank of Japan left interest rates unchanged but the Hang Seng fell back in late trading with real estate stocks dragging the index lower.