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London pre-open: Stocks seen lower as investors eye BoE

By Michele Maatouk

Date: Thursday 22 Mar 2018

London pre-open: Stocks seen lower as investors eye BoE

(ShareCast News) - London stocks were set for a slightly weaker open on Thursday as investors shifted their attention to the Bank of England, after the US Federal Reserve hiked rates as expected a day earlier.
The FTSE 100 was called to open 14 points lower at 7,025.

The Fed lifted rates by 25 basis points on Wednesday, as widely expected, to a target range of 1.5% to 1.75% and signalled that rates would rise twice more this year and three times in 2019.

Michael Hewson, chief market analyst at CMC Markets, said: "There had been an expectation that the central bank would signal its intent for a higher pace for rate rises in 2018, however this always seemed optimistic, with policymakers keeping the prospect of three rate rises intact for this year, while upgrading the prospects for 2019 from two to three increases. The Fed also upgraded the growth outlook for this year and next.

"At this press conference the new Fed chief cut an optimistic figure about the US economy, however the statement did suggest that the Fed did have some concerns with a slight tweak to the language which downgraded the description of economic activity from "solid" to "moderate"

"This seems entirely sensible in light of recent data on the consumer side which has seen retail sales decline for three months in succession."

With the Fed announcement out of the way, market participants will focus on the upcoming policy decision from the Bank of England due at midday, along with the latest BoE minutes. Hewson said that while no change is expected, Wednesday's wages and unemployment data have shifted the calculus on a possible move on UK rates to the May meeting, when we get the next inflation report.

"By then the gap between wages and headline inflation could well have narrowed further and would be an ideal window for the central bank to edge rates up by another 25bps."

Also in focus will be UK retail sales figures at 0930 GMT.

In corporate news, Reckitt Benckiser has ended discussions with Pfizer about buying part of the US company's consumer healthcare business.

The consumer goods company said it did not want to buy the whole business and that it was not possible to buy part of the division.

Workspace Group has been granted planning permission for a significant mixed-use redevelopment at its Chocolate Factory and Parma House properties in Wood Green, north London, it announced on Thursday.

The company said the planning consent was for an "extensive" redevelopment across the 2.3 acre site, with 230 new homes, including 35% affordable housing, and 26,000 square feet of new office space, with the loss of 89,000 square feet of office and light industrial space. It said the new office space would comprise a 6,000 square feet roof extension to the existing Chocolate Factory building, which was already undergoing refurbishment to provide 60,000 square feet of upgraded space and 20,000 square feet of new office space within the residential development.

Halma, the FTSE 100 health and safety technology group, said profits for the year to 31 March would be in line with current market forecasts as growth continued in the second half.

Boasting a strong financial position, the company said it continued to identify potential acquisition opportunities in all four of its sectors.

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