LONDON MARKET EARLY CALL: Higher Call Ahead Of Bank Of England Vote

LONDON (Alliance News) - London share prices are set to open slightly higher on Thursday, with ...

Alliance News 14 September, 2017 | 7:00AM
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LONDON (Alliance News) - London share prices are set to open slightly higher on Thursday, with market attention on the release at noon of minutes from the Bank of England's Monetary Policy Committee meeting.

Before the central bank policy announcement, the UK corporate calendar contains half-year results from blue-chips Next and WM Morrison Supermarkets and mid-cap Spire Healthcare Group, while food wholesaler Booker Group, which is in the process of being acquired by Tesco, releases a trading statement.

IG says futures indicate the FTSE 100 index of large-caps to open 3.3 points higher at 7,383.00. The blue-chip index closed down 0.3%, or 20.99 points, at 7,379.70 on Wednesday.

"While no change is expected to monetary policy overall there could be little nuances that might point to a slight shift in tone with respect to the timing of a potential paring back of the current level of monetary easing," says Michael Hewson, chief market analyst at CMC Markets.

The MPC will return to nine members following the appointment of Deputy Governor David Ramsden, who joined the rate-setting body on September 4. It is widely anticipated that there will be a 7-2 vote for unchanged rates, at the historic low of 0.25%, compared to a 6-2 vote in August.

Some economists believe a vote to hike could come from Andrew Haldane, joining hawks Ian McCafferty and Michael Saunders who voted for a hike in the previous meeting. This would see the split narrow to 6-3.

Haldane in June hinted at potentially supporting some degree of policy tightening before the end of the year, saying he was ready to vote for an increase in interest rates "relatively soon".

Analysts at Deutsche Bank said a Haldane vote to raise rates is "more likely" at the Thursday meeting than it was last month, when he voted in line with the majority to maintain interest rates.

"If the MPC wanted to send a message to the markets then a Haldane shift to the hawk camp would certainly do that, and help keep a tactical floor under the pound at a time when other central banks are already starting to look at hitting the monetary brakes," says CMC's Hewson.

Sterling was quoted at USD1.3206, flat against USD1.3208 at the London close on Wednesday.

Meanwhile, the latest survey from the Royal Institution of Chartered Surveyors on Thursday showed the house price balance in the UK rose unexpectedly in August.

The house price balance rose to +6.0 in August from +1.0 in July. Meanwhile, it was expected to remain flat during the month.

Although signalling a return to growth, this measure is consistent with only a marginal rise in national prices, RICS said. The London price gauge remained stuck firmly in negative territory, posting the weakest reading since 2008.

In Asia on Thursday, the Japanese Nikkei 225 index is down 0.2% In China, the Shanghai Composite is down 0.3%, while the Hang Seng index in Hong Kong is down 0.6%.

Already released, China's industrial production and retail sales growth weakened in August and fixed asset investment logged its slowest growth since 1999, as measures to curb excessive lending and reduce overcapacity weighed on activity.

Industrial production climbed 6% year-on-year in August, slower than the 6.4% increase seen in July and the weakest pace of expansion logged so far this year. Output growth was forecast to accelerate to 6.6%.

Similarly, retail sales growth eased to 10.1% in August from 10.4% in July. This was the slowest growth since January to February this year and below the expected rate of 10.5%.

During January to August, fixed asset investment increased 7.8% from previous year, after rising 8.3% in the first seven months of the year. The latest annual expansion was the slowest since 1999.

The main culprit for weak activity and spending was a slowdown in infrastructure investment, which also weighed on industrial output, Julian Evans-Pritchard, an economist at Capital Economics, said.

Wall Street ended higher on Thursday, with the Dow Jones Industrial Average ending up 0.2%, S&P 500 and the Nasdaq Composite all closing up 0.1%.

Later in the day, August consumer price inflation figures for Italy are released at 0900 BST and for the US at 1330 BST.

By Lucy Heming; lucyheming@alliancenews.com

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