LONDON MARKETS: FTSE 100 Rises As RBS Jumps After DOJ Settlement
May 10 2018 - 3:38AM
Dow Jones News
By Carla Mozee, MarketWatch
Bank of England's policy decision due Thursday; BT warns
Blue-chip stocks in the U.K. edged higher Thursday, sticking
close to a more than three-month high, with Royal Bank of Scotland
PLC shares climbing as the lender settled a U.S. legal complaint
over risky loans.
Stocks edged higher before Thursday's key event: the Bank of
England's policy decision and updates on its outlooks for inflation
and economic growth.
How markets are moving
The FTSE 100 index was up 0.2% to 7,673.02, with the consumer
services group rising the most, while the telecom and utility
groups lost the most. The benchmark on Wednesday jumped 1.3%
(http://www.marketwatch.com/story/ftse-100-rises-as-oil-rally-buoys-bp-and-shell-2018-05-09)
and closed at its highest level since Jan. 29, according to FactSet
data.
The pound rose to $1.3551 from $1.3547 late Wednesday in New
York, as traders looked head to the Bank of England. Against the
euro, sterling bought EUR1.1427 versus EUR1.1430 in the prior
session.
Read:The pound at $1.3850 or $1.3350? It all rests on the BOE's
'Super Thursday', ING says
(http://www.marketwatch.com/story/the-pound-at-13850-or-13350-it-all-rests-on-the-boes-super-thursday-ing-says-2018-05-09)
What's driving markets
Ahead of the Bank of England's "Super Thursday", investors waded
through company-specific updates, including Royal Bank of
Scotland's (RBS.LN)(RBS.LN) nearly $5 billion settlement with the
U.S. Department of Justice
(http://www.marketwatch.com/story/rbs-to-pay-49-billion-in-settlement-with-department-of-justice-2018-05-10)
over risky loans in the run-up to the financial crisis. RBS shares
bulked up 4.8%.
"It's a happy day for RBS, with the DOJ settlement coming in
well below what we had feared. Of the $4.9 billion fine, around
$3.5 billion has already been provided for, so the impact on future
earnings appears to be at the very low end of expectations," said
Neil Wilson, chief market analyst at Markets.com, in a note.
"This removes the last great barrier to the government selling
off its stake and we would envisage that the [U.K.'s Chancellor of
the Exchequer Philip Hammond] will expedite the disposal of its 71%
shareholding," said Wilson.
For the Bank of England, investors are seeing only a chance of
around 10% that policy makers will raise its key interest rate on
Thursday. Expectations for a May move have fallen after a string of
disappointing economic data underscored by weak first-quarter
growth in British gross domestic product.
So investors will gauge what the next move might be for Gov.
Mark Carney and his colleagues when they release their quarterly
inflation report, rate decision and meeting minutes on this
so-called "Super Thursday". The policy decision and the outlooks
will be released at 12 p.m. London time, or 7 a.m. Eastern Time.
Carney's news conference starts at 12:30 p.m. London time.
Read:The pound at $1.3850 or $1.3350? It all rests on the BOE's
'Super Thursday', ING says
(http://www.marketwatch.com/story/the-pound-at-13850-or-13350-it-all-rests-on-the-boes-super-thursday-ing-says-2018-05-09)
Readings on U.K. industrial production and trade for March are
due at 9:30 a.m. London time.
What are strategists saying?
In terms of the Bank of England, "[m]arket participants will try
to gauge how likely such a bullish tilt in the future seems at this
point and the best way to do that is by monitoring how the Monetary
Policy Committee members will vote," said Konstantinos Anthis, head
of research at ADS Securities, in a note.
"A split decision where the majority votes for no changes in
policy but a couple -- or a few -- members vote for an immediate
hike would signal that there is still a bullish undertone within
the Bank of England. Should this be the case, the severely weakened
pound will have the opportunity to rally above $1.36 with the next
level coming in focus being the $1.3720 March lows," wrote
Anthis.
Stock movers
BT Group PLC (BT.A.LN)(BT.A.LN) slid 8.1% after the
telecommunications company cut its forecast for fiscal 2019
adjusted earnings and revenue
(http://www.marketwatch.com/story/bt-group-to-axe-13000-jobs-warns-on-profit-2018-05-10).
BT also said it's cutting 13,000 jobs over the next three years as
it steps up its restructuring efforts.
Next PLC shares (NXT.LN) surged 6.7%, topping the FTSE 100,
after the apparel and housewares retailer raised its full-year
pretax profit guidance
(http://www.marketwatch.com/story/next-raises-pretax-profit-guidance-2018-05-10)to
GBP717 million ($971.5 million).
Randgold Resources Ltd. shares (RRS.LN) (RRS.LN) tumbled 8.1% as
the gold miner said its first-quarter pretax profit fell 27%
(http://www.marketwatch.com/story/randgold-resources-pretax-profit-drops-27-2018-05-10)
because of lower gold sales and higher production costs.
(END) Dow Jones Newswires
May 10, 2018 04:23 ET (08:23 GMT)
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