LONDON MARKETS: FTSE 100 Steady Ahead Of U.K. Spring Statement, U.S. Inflation Data
March 13 2018 - 6:42AM
Dow Jones News
By Carla Mozee, MarketWatch
Antofagasta shares higher after earnings report
U.K. stocks wavered Tuesday, as investors displayed caution
before the release of the U.K. Treasury's Spring Statement on
public finances and an update on U.S. inflation, which has been a
major driver of moves across global markets this year.
How markets are moving
The FTSE 100 index was down 1 point at 7,213.72, and has been
darting between small gains and losses. The oil and gas and basic
materials groups moved higher while telecom and consumer-related
stocks fell the most. On Monday, the benchmark shed 0.1%
(http://www.marketwatch.com/story/ftse-100-struggles-to-keep-grip-on-gains-2018-03-12),
breaking a five-session win streak.
The pound bought $1.3889, up from $1.3848 late Friday in New
York.
What's driving markets
The small moves on the benchmark FTSE 100 comes as investors
wait for the British government's Spring Statement, which should
include the Office for Budget Responsibility's economic growth
forecasts and a cut in the estimate for how much the government
will need to borrow in 2017-2018.
In addition, the OBR is expected to provide an estimate on how
public finances will be affected by payments the U.K. will make to
the European Union as a result of Brexit. Chancellor of the
Exchequer Philip Hammond is scheduled to speak in parliament at
12:30 p.m. London time, or 8:30 a.m. Eastern Time.
Attention should then swing to the U.S. consumer prices report,
also due at 12:30 p.m. London time, or 8:30 a.m. Eastern Time.
Global equity markets went into meltdown mode in February on
concern that a faster pace of U.S. inflation would prompt the U.S.
Federal Reserve to raise interest rates four times this year,
instead of the three anticipated.
But some questions about the rate of inflation and the pace of
rate hikes were raised by Friday's U.S. jobs report, which showed a
subdued rate of wage growth.
The consumer prices index is forecast to come in at 0.2%,
compared with 0.5% in January, owing to lower gasoline prices. The
annual inflation rate is running at 2.2%, and at 1.8% excluding
food and energy prices.
Read:What to watch in the CPI report
(http://www.marketwatch.com/story/what-to-watch-in-the-cpi-report-2018-03-12)
What strategists are saying
"We would expect the OBR's GDP growth projections to be a little
more upbeat than in November. This should be supported by a small,
positive change of view on productivity trends, after the OBR's
downgrade last autumn," said Philip Shaw, chief economist at
Investec, in a note.
"Better news on the public finances should be announced as well.
After expecting borrowing to rise this year, the OBR should
acknowledge that the deficit in 2017/18 should narrow to around
GBP40 billion from GBP46 billion last year. This would be
equivalent to 2% of GDP, the lowest shortfall since 2001/02," he
said.
Stock movers
Antofagasta PLC (ANTO.LN) shares rose 2.2%, topping the FTSE
100, after the copper producer posted a more than fourfold rise in
2017 net profit
(http://www.marketwatch.com/story/antofagasta-2017-profit-soars-on-copper-price-rise-2018-03-13).
Direct Line Insurance Group PLC (DLG.LN) shares fell 1.9% after
Deutsche Bank downgraded the car and property insurer's rating to
hold from buy.
"We believe Direct Line is now entering a transitory phase where
the capital management story is well understood by investors (hence
reflected in the current share price), whereas the benefits of
positive strategic initiatives may still be a couple of years away
from showing tangible benefit," wrote Deutsche Bank analysts.
(END) Dow Jones Newswires
March 13, 2018 07:27 ET (11:27 GMT)
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