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FTSE creeps higher as markets await Fed's 'T-day'
by Chris Marshall on Sep 18, 2013 at 09:27
European shares eked out only small gains as investors prepared for the US Federal Reserve to today announce the beginning of the end for its vast asset-buying stimulus scheme.
On balance, economists expect the Fed to start ‘tapering’ its monthly asset purchases by $10 billion, meaning it would still be spending $75 billion a month to stimulate the economy. Though there is still some uncertainty about the timing, markets have had plenty of time to price-in the slow withdrawal of Fed money and investors do not expect a dramatic reaction to the announcement later.
There's more to today's meeting than tapering though, Rabobank currency strategist Jane Foley said. 'It is not just the size of the tapering which will be important this evening. Crucial will be the forward guidance offered by the Fed and the forecasts that will be published.'
The UK’s FTSE 100 was trading 0.1% higher at 6,578. The blue chip index remains up 1.2% over the past six month period when angst over the end of US stimulus has been the dominant market theme.
Smiths Group (SMIN.L) was the biggest riser, up 3.5% to £14.24, after the engineering company announced a small rise in full year profits to £560 million from £554 million the previous year. The company also announced a special dividend of 30p.
Investec analyst Michael Blogg says Smiths shares are worth buying: 'In our view, the rating fails to reflect the quality of the group and perhaps the 30p special dividend will act as a reminder.'
Lloyds (LLOY.L) clawed back some of yesterday’s losses, rising 1.3% to 75.6p, as investors and analysts continued to weigh up the future for the bank after the government’s announcement that it had sold of its first stake.
Barclays (BARC.L) was the biggest faller, trading ‘ex-rights’, without the right to buy the bank’s shares in its rights issue. Shares dropped 6.1% to 280p.
The pound was trading higher, up 0.1% at $1.5925 ahead of the publication of the minutes of the Bank of England’s September committee meeting, where no change was made to policy.
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