FTSE 100 stagnates as markets await a busy day for business news and Bank of England interest rate decision


The FTSE 100 was heading for a flat start today, with traders hedging their bets before investors digest a flurry of news on expected corporate earnings later.

Taking large positions ahead of the Bank of England’s noon monetary policy announcements was also not considered wise.

The index had a moderate session yesterday after being pulled down by disappointing financial advice from the stock market given by GlaxoSmithKline, whose 6% drop dragged down the entire FTSE, offsetting the impact of a price high oil on BP and Shell.

IG Index platform traders called the FTSE just 9 points at 6511, but these little predictions can easily be reversed.

Prime Minister Boris Johnson’s warning yesterday of acting too soon to lift Covid lockdowns cast a veil on sentiment, although figures on Britain’s vaccine rollout continue to impress , with over 10 million people now having had the first jab.

Slow progress in Europe has had the opposite effect on investor sentiment, as many UK stocks are heavily dependent on exports.

The Bank of England is expected to leave its monetary policy on hold, citing the lingering uncertainty surrounding the impact of Covid on the economy. This means leaving interest rates at 0.1% and the asset purchase program at £ 895 billion.

The current level of asset purchases was set in November and the economic situation has since changed with the December lockdowns still in place but, on the bright side, a Brexit trade deal with the EU. The latter may be flawed, but it’s a marked improvement over the potential for a no-deal crash it might have had in November.

As has been the case for months, the markets will be particularly sensitive to any mention in the Bank’s minutes or at a press conference of “negative interest rates”.

CMC Markets pointed out today that Governor Andrew Bailey described them as “controversial” last month, and that one word has triggered the pound sterling to rise in hopes the Bank does not go down that route.

Also later this morning we receive news on the construction sector of the UK economy. Analysts expect PMI data to hit 52.9 for January, down from 54.6 in December on an index where anything above 50 means expansion.

One of the UK stock market’s darling stocks, publisher Future, could have a bumpy ride after shareholders told the Financial Times they were unhappy with a proposed bonus deal that could see its chief executive Zillah Byng -Thorne pay over £ 40million. .

The FT said two shareholders had expressed concern over the plan which could pay staff up to £ 95million in stock options per year if they meet certain price and dividend targets .

Shareholder advisers Institutional Shareholder Services and Glass Lewis recommended that investors vote against.

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