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London open: All eyes on US Fed minutes
US rate-setters certainly seem to want to begin raising interest rates as soon as possible, but will they? Should they? Analysts believed the minutes of the Federal Reserve’s last policy meeting, which were set to be published on Wednesday evening, might help to shed some light on the debate going on within the central bank.
Since the last US jobs report some members -albeit not all – of the Federal Reserve’s policy committee had sounded a more hawkish note, with some even hinting at a need for quicker than anticipated tightening.
However, in the interim the data on China had been mixed, the US dollar had strengthened and volatility in financial markets had picked up. Meanwhile, on the real side of the economy, conditions in the manufacturing sector were rather poor.
Against that backdrop, as of 08:26 the Footsie was 26.51 points lower at 6,242.36.
Overnight, the Shanghai Stock Exchange’s Composite Index slid 1.01% to end at 3,568.47, amid a mixed close on Wall Street as commodities slid and, according to some market commentary, after reports of bomb threats in Hannover, Germany, hit the wires.
At last count, Fed funds futures were pricing in a roughly 64% probability of an interest rate hike by the US Federal Reserve, down from 70% after the most recent US jobs data was released
Two Fed speakers are also scheduled to take to the podium later tonight.
“Our colleagues in the US expect the minutes to be more balanced and much less committed to a December hike than what was inferred from the October communiqu. Clearly there is a lot of data left between now and the December 15th/16th meeting (including the November payrolls number) and while the latest employment report was encouraging, our colleagues note that growth and inflation numbers could be slipping given the latest retail sales and import price figures.
“They expect the probability of a December rate hike to fall closer to 50/50 over the next couple of weeks,” Deutsche Bank’s Jim Reid said in a research report sent to clients.
In the opinion of Michael Hewson, chief market analyst at CMC Markets UK, “today’s minutes will certainly give us an insight into how vigorous a debate was had and whether the misgivings articulated by permanent members Lael Brainard and Daniel Tarullo in comments prior to the meeting in October (when the Fed adopted more neutral language) were still held by them.”
Three Fed speakers, including the presidents of the reserve banks of New York and Atlanta, Charles Dudley and Dennis Lockhart, respectively, were due to speak on a panel at around 13:00 GMT on the financial payments system.
They were to be followed later in the day by a speech from Dallas Fed president Steven Kaplan on economic conditions.
There were no major economic reports scheduled for release either in the UK, the Eurozone or US.
Informa to hive off two Dutch units
Informa has announced it is disposing of its two Dutch conference businesses. The FTSE 250 company announced its plans on Wednesday. The company will get rid of the two businesses based in Amsterdam and Eindhoven, as well as a small local publishing operation. The disposals are part of the company’s portfolio management strategy. It follows the recent disposal of its two Scandinavian businesses in Sweden and Denmark, as well as the previous sale of its Consumer Information business and the closure of operations in Johannesburg and Melbourne.
LondonMetric Property has acquired a 230,000 square ft distribution warehouse from a private vendor for 28.8m, which will be funded from existing resources, reflecting a net initial yield of 5.8%. The warehouse is situated in a prime distribution location on a 11.5 acre site in Reading, next to Junction 11 of the M4, and close to Tesco’s 1mn sq ft regional hub. Other companies nearby include Royal Mail and Proctor & Gamble.
Hikma Pharmaceuticals said it had overcome concerns raised by the US Food and Drug Administration (FDA) over environmental monitoring issues at its Portugal plant. The FDA in October 2014 sent the company a “warning letter” flagging issues the issues. In a statement, Hikma said it had received a further letter from the FDA “closing out” the warning letter from last year.
UK insurer Hastings Group Holdings, which listed on the London Stock Exchange in October, posted a 19% rise in operating profit for the first nine months of the year, as gross written premiums advanced.
Earnings at HICL Infrastructure were down significantly in the six months to 30 September 2015, the company reported on Wednesday morning. Its interim results shows income of 84.4m, down from 142.3m in the corresponding period last year. Profits were down too, from 132m last year to 71.7m for this period.
