London midday: Unanimous MPC vote on QE takes markets by surprise

17th Jul 2013 11:53

Minutes from this month's Monetary Policy Committee (MPC) meeting took markets by surprise on Wednesday morning, with the FTSE 100 slipping into the red after it was revealed that policymakers voted unanimously to leave the Bank of England's (BoE) bond-buying programme unchanged.Investors were largely shrugging off some better-than-estimated labour-market data from the UK this morning, with the number of people claiming unemployment benefits dropping by 21,200 in June, much more than the 8,000 fall expected. This was the eighth straight monthly drop and the fastest rate of decline in three years.Instead, markets were focused on the BoE as investors had expected three out of nine members of the MPC to vote for an increase in quantitative easing (QE). With all nine member opting to maintain asset purchases, this was the first unanimous vote since October 2012."The minutes of July's MPC minutes suggested that the new Governor Mark Carney has united the Committee around using forward guidance rather than more quantitative easing to boost the economy," said analysts at Capital Economics this morning.Markets were also nervous this morning following comments made yesterday by Esther George, the head of the Kansas City Federal Reserve, who said that now is the time to taper QE in the States as the economic recovery gains momentum.The remarks came ahead of Fed Chairman Ben Bernanke's semi-annual testimony to Congress today, with investors likely to watch closely for any change in tone following his dovish comments made last week. Market Strategist Ishaq Siddiqi from ETX Capital said that the Q&A will be "highly scrutinised for signs of a possible timeframe for tapering [QE] when the Fed eventually starts the process and also the amount the Fed will gradually unwind."FTSE 100: Smiths drops after profit warningEngineering company Smiths Group slumped this morning after saying that full-year headline operating profit will likely to be £15m below current expectations, reflecting contractual issues in its Detection unit. A few stocks were also in the red this morning after broker downgrades: precious metals and chemicals group Johnson Matthey and consumer products firm Unilever were hit by ratings cuts from Credit Suisse, to 'neutral' and 'underperform', respectively; while chemicals business Croda was lower after Barclays Capital lowered its rating to 'underweight'.Heading the other way was RSA Insurance after Citigroup raised its recommendation for the stock to 'buy', saying that the company is on a "clearer path to earnings growth".Heavyweight mining stocks were doing their best to lift the FTSE 100 with Fresnillo, Antofagasta, Glencore Xstrata, Anglo American and Rio Tinto registering decent gains. BHP Billiton also rose after reporting that half-year profit surged as revenue climbed on the back of strong production results. Imperial Tobacco was among the worst performers after going ex-dividend, meaning that from today new investors will not be able to get their hands of the company's latest payouts.Real estate firm Land Securities was also lower after saying that the retail market remained "challenging" in the first quarter. Nevertheless, the company said that conditions in London remain strong.FTSE 250: Hochschild Mining gains after Q2 updateHochschild Mining was a high riser this morning after saying that production volumes in the first half were in line with expectations. The company reiterated its output guidance for 20m ounces for 2013.WH Smith, WS Atkins and Telecom Plus all went ex-dividend this morning. The latter fell despite this morning reporting an 11% hike in customer numbers during the first quarter.FTSE 100 - RisersFresnillo (FRES) 1,049.00p +3.25%BHP Billiton (BLT) 1,867.00p +1.91%Glencore Xstrata (GLEN) 269.15p +1.74%Anglo American (AAL) 1,344.00p +1.51%Tesco (TSCO) 360.30p +1.35%Rio Tinto (RIO) 2,916.00p +1.14%Antofagasta (ANTO) 842.50p +1.14%Rexam (REX) 490.90p +0.90%Babcock International Group (BAB) 1,197.00p +0.84%Tullow Oil (TLW) 1,100.00p +0.73%FTSE 100 - FallersImperial Tobacco Group (IMT) 2,184.00p -3.06%Land Securities Group (LAND) 943.00p -2.73%Smiths Group (SMIN) 1,355.00p -2.59%Unilever (ULVR) 2,742.00p -2.14%Resolution Ltd. (RSL) 303.40p -2.10%Capita (CPI) 1,033.00p -2.09%Johnson Matthey (JMAT) 2,751.00p -1.96%Hammerson (HMSO) 524.00p -1.87%Admiral Group (ADM) 1,364.00p -1.87%Serco Group (SRP) 614.00p -1.84%FTSE 250 - RisersHochschild Mining (HOC) 145.90p +7.20%Dialight (DIA) 1,070.00p +3.88%Salamander Energy (SMDR) 132.00p +3.53%Synthomer (SYNT) 200.70p +2.92%Polymetal International (POLY) 568.50p +2.90%Supergroup (SGP) 976.50p +2.79%Keller Group (KLR) 1,125.00p +2.55%Thomas Cook Group (TCG) 145.80p +2.24%Balfour Beatty (BBY) 228.20p +2.01%Evraz (EVR) 98.75p +1.96%FTSE 250 - Fallersesure Group (ESUR) 312.00p -4.88%Telecom Plus (TEP) 1,333.00p -4.10%Ted Baker (TED) 1,811.00p -2.90%Xaar (XAR) 846.00p -2.76%Imagination Technologies Group (IMG) 282.50p -2.69%Diploma (DPLM) 583.50p -2.67%Atkins (WS) (ATK) 1,046.00p -2.52%Crest Nicholson Holdings (CRST) 336.10p -2.41%Rightmove (RMV) 2,248.00p -2.22%Smith (DS) (SMDS) 249.50p -2.16%BC