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FTSE 100 steady ahead of BoE decision

European equity markets are a mixed bag this morning, and the FTSE 100 is a touch higher as traders await the Bank of England (BoE) interest rate decision. 

In recent months, some of biggest moves on the London equity benchmark have been sterling driven so dealers will be playing close attention to announcement.

BT shares are lower after the company posted a 2% dip in revenue and 4% fall in profits in the second-quarter. There was sharp decline in customer acquisition in the TV department. It brought in 7000 new clients, a major decline from the 63,000 it acquired in the same period last year. Investors are always very sensitive to slowing growth rates, and this caused concern. BT’s share have been in decline since late 2015, and the downward trend is showing no signs of turning around, and the stock could target 240p.

Royal Dutch Shell posted a 197% jump in third-quarter earnings, when compared with the same period last year. The company’s downstream business played a big role in the boost in profits. The energy market has been depressed for the past few years, but the company’s chemicals and refining operations have helped pick up the slack. Now that that the oil market is picking up again, the company could be heading back to firing on all cylinders.

GBP/USD is a toucher lower as dealers await the Bank of England (BoE) meeting at 12pm, and the press conference that follows at 12.30pm. The market are expecting rates to be hiked to 0.5% from 0.25%. The forward guidance will be crucial, and traders will be wondering if this is just an interest rate re-set of the August 2016 cut, or whether this is the beginning of a series of hikes. The BoE are running low on credibility, and if they don’t hike today, it would be a further blow to the reputation. UK construction PMI came in at 50.8, up from 48.1 in September.

Last night the Federal Reserve kept interest rates on hold, and they were upbeat about the US economy. Traders are preparing themselves for the prospect of a rate hike in December.

EUR/USD has edged higher as we have had a number of manufacturing reports from major eurozone members, and the majority of which exceeded expectations.

Today we are likely to hear who will be the head of the Fed, and the market talk is pointing to Jerome Powell. The policy maker neither falls into the hawkish or dovish camp at the US central bank, and he is considered to be neutral.

We are expecting the Dow Jones to open 22 points lower at 23,413, and we are calling the S&P 500 down 4 points at 2574.

At 12.30pm, the US will release the initial jobless claims report and the consensus is for a reading of 235,000, and that would be a slight increase on last week’s 233,000.

Apple, Ralph Lauren and Yum Brands will announce their quarterly figures today.


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