LONDON (ShareCast) - - Inflation Report, rate speculation keeps markets cautious
- Ukraine crisis in focus as Russian convoy heads to border
- Chinese data disappoints, Japanese GDP sinks
- Ex-dividend stocks fall

techMARK 2,725.51 -0.10%
FTSE 100 6,630.77 -0.02%
FTSE 250 15,403.28 -0.40%

Weak economic data from Asia, ongoing geopolitical tensions and nervousness ahead of the Inflation Report prompted a subdued start for UK stocks on Wednesday.

The FTSE 100 was trading down 0.02% at 6,630.77 early on, with ex-dividend stocks limiting upside on the index.

Speculation about interest rates is likely to drive market sentiment on Wednesday morning as analysts pore over the quarterly Inflation Report from the Bank of England due out at 10:30.

Chief economist Simon Smith from Fxpro said that what is important is "the degree to which the Bank believes that the amount of slack in the economy has been absorbed more rapidly than was anticipated three months ago".

"This will have the bigger impact on the Bank's view of inflation in two year's time, which is what matters for the interest rate outlook," Smith said.

Former Monetary Policy Committee (MPC) member Andrew Sentance and DeAnne Julius, a founder member of the MPC, have both been cited over the last 24 hours as calling for a hike in interest rates.

Developments in the Ukraine crisis were also in focus for investors on Wednesday with 280 trucks allegedly carrying humanitarian aid on their way from Russia to the border. However, Ukraine has said that it would not allow the convoy to pass until it can determine what is inside the vehicles.

Economic data

In China, industrial production, retail sales, money supply growth, fixed asset investment and new loans figures all came in worse than expected overnight. Loan growth in particular plunged to its lowest level since 2008 in July.

Japanese gross domestic product (GDP) declined at an annualised rate of 6.8% in the second quarter of 2014, a sharp turnaround from the revised 6.1% growth at the start of the year as a result of a hike in sales taxes. While this was not as bad as the 7% fall in GDP expected, it was Japan's worst contraction since 2011.

UK unemployment figures, Eurozone industrial production and US retail sales will also be closely watched by the markets later on.

Ex-div stocks weigh

A long list of blue chip stocks were lower this morning after going ex-dividend, meaning that investors no longer qualify for their latest payouts. These included AstraZeneca, BG Group, GKN, IMI, Meggitt, Pearson, Rio Tinto, Schroders, Standard Chartered, Royal Dutch Shell, Fresnillo, Ashtead, BT Group and Diageo. According to Reuters, these stocks took up to 21.26 points off the index.

Mining and trading giant Glencore fell after a mixed production report for the first half of 2014 with output of some commodities improving while others declined. However, production of copper and coal - the company's biggest contributors to profit - both increased over the year.

Car insurance specialist Admiral dropped after underwhelming with a 2% rise in adjusted profits before tax to £184.9bn in the first half as growth in the UK was partly offset by weakness abroad. The company also announced it has promoted Geraint Jones, who has held a number of senior finance positions, to chief financial officer.

Defensive sectors such as utilities and tobacco were among the best performers in early trading. United Utilities, Severn Trent, National Grid, British American Tobacco and Imperial Tobacco were all on the rise.

G4S was higher after winning £1.2bn of contracts in the first half and increasing profits. G4S, which faced strong criticism for failing to provide enough security guards at the 2012 Olympics and allegations of overcharging on a UK government prisoner tagging contract, said new contract wins had risen 26%.

Oil and gas services group Petrofac gained after winning a contract with Malaysia's state-owned energy company Petronas worth over $500m.


FTSE 100 - Risers
Coca-Cola HBC AG (CDI) (CCH) 1,313.00p +1.94%
Prudential (PRU) 1,391.00p +1.64%
Morrison (Wm) Supermarkets (MRW) 167.80p +1.39%
United Utilities Group (UU.) 857.50p +1.30%
G4S (GFS) 263.10p +1.27%
easyJet (EZJ) 1,274.00p +1.27%
Vodafone Group (VOD) 195.80p +1.19%
Severn Trent (SVT) 1,915.00p +1.11%
SSE (SSE) 1,467.00p +1.03%
Royal Mail (RMG) 436.00p +1.02%

FTSE 100 - Fallers
Rio Tinto (RIO) 3,425.00p -2.56%
Admiral Group (ADM) 1,417.00p -2.28%
Glencore (GLEN) 369.30p -1.52%
Ashtead Group (AHT) 882.00p -1.40%
Meggitt (MGGT) 465.50p -1.21%
Standard Life (SL.) 358.30p -1.19%
Persimmon (PSN) 1,261.00p -1.18%
BT Group (BT.A) 370.40p -1.15%
IMI (IMI) 1,351.00p -1.10%
Schroders (SDR) 2,263.00p -1.09%

FTSE 250 - Risers
Brit (BRIT) 250.00p +2.04%
Infinis Energy (INFI) 215.70p +1.84%
Kennedy Wilson Europe Real Estate (KWE) 1,084.00p +1.78%
Daejan Holdings (DJAN) 4,833.00p +1.36%
Perform Group (PER) 231.00p +1.32%
Essentra (ESNT) 803.50p +1.32%
COLT Group SA (COLT) 137.80p +1.32%
Fidessa Group (FDSA) 2,252.00p +1.26%
Just Eat (JE.) 243.00p +1.25%
Dixons Carphone (DC.) 326.30p +1.24%

FTSE 250 - Fallers
Direct Line Insurance Group (DLG) 281.40p -5.06%
Serco Group (SRP) 316.50p -4.24%
Countrywide (CWD) 494.50p -3.79%
EnQuest (ENQ) 120.00p -3.77%
CSR (CSR) 509.50p -3.69%
Michael Page International (MPI) 431.10p -3.54%
Greene King (GNK) 785.50p -2.96%
Oxford Instruments (OXIG) 1,215.00p -2.57%
Domino Printing Sciences (DNO) 594.00p -2.46%
Alent (ALNT) 335.40p -2.41%

BC

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