London pre-open: Slightly lower start expected

Thu 17 Aug 2017

LONDON (SHARECAST) - (ShareCast News) - Stocks are expected to come under slight pressure at the start of the day despite the release of a relatively dovish set of Fed meeting minutes overnight and a positive close to the trading session on Wall Street.
The Footsie was being called to begin the day 17 points below Wednesday's closing mark of 7,433.03.

According to the minutes of the US central bank's July policy meeting, "Many participants [...] saw some likelihood that inflation might remain below 2 percent for longer than they currently expected, and several indicated that the risks to the inflation outlook could be tilted to the downside."

Commenting on the content of the minutes, Michael Hewson, chef market analyst at CMC Markets UK, said: "It seems clear from last nights Fed minutes that while there are divisions on the timing of when to pull the trigger on the next rate rise, there does appear to be some sort of consensus forming on starting to reduce the size of the US central banks $4.5trn balance sheet, which could come about with an announcement at the September meeting."

The main release on the economic calendar for Thursday was the July retail sales report at 0930 BST.

There was also keen interest in the minutes of the European Central Bank's last policy meeting, with their contents due to be published at 1330 BST.

Stateside, investors were waiting on a flurry of economic data, including the Philly Fed regional manufacturing index for August at 1330 BST and industrial production figures for July at 1415 BST.

DIY specialist cautious on outlook in UK (and France)

Sales at retailer Kingfisher were hammer onto a big toe in the second quarter and the B&Q and Screwfix owner remained cautious on the outlook for the UK and France in the second half. In the three months to 31 July, group like-for-like sales shrank 1.9%, deteriorating from the 0.6% decline in the first quarter, though management said they "remain comfortable" with the market forecast of underlying earnings per share of 26p for the full year.

Hikma Pharmaceuticals reported a 1% rise in first-half sales but a 6% fall in earnings per share, and trimmed its guidance for the full year as the generic drugs arm faces tougher market conditions. Group revenue of $895m in the first six months of the year, up 1% year on year and up 5% in constant currencies, and for the full year management now see it rising to "around $2bn", down from previous guidance of $2-2.1bn issued in May.

Kaz Minerals saw revenues more than double over the six months ending on 30 June to reach $837m, versus $363m in the year-ago period, thanks to higher volumes and commodity prices. Together with net cash costs of $0.64 per pound of copper, that drove a greater than four-fold jump in operating profits to $291m.
Net debt was also lower, falling to $2.44bn, with the company having benefited from lower levels of capital outlays and the refund of $176m in project VAT. Management narrowed its full-year copper production target to between 235 and 260kt.
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