FTSE flat as traders eye Bernanke – Barclays/ABF earnings disappoint

<p>The FTSE 100 traded largely flat, swinging between small gains and losses, into the close on Wednesday with traders eyeing the early evening FOMC rate decision and inaugural press […]</p>

The FTSE 100 traded largely flat, swinging between small gains and losses, into the close on Wednesday with traders eyeing the early evening FOMC rate decision and inaugural press conference with Fed Chairman Ben Bernanke to determine the next phase of US monetary policy.

A near 2% drop in the price of Copper triggered selling in heavyweight mining shares whilst earnings from Barclays and Associated British Foods disappointed investors, dragging both companies shares to the bottom of the FTSE 100 performers list today.

The Barclays earnings, which fell 8% quarter on quarter, came in under market consensus and considering that there had been a rally of 6% in the bank’s share prices in anticipation of today’s results, it is no surprise that prices have come off today. Shares lost 4% on the day as a result.

It was earnings from Associated British Foods however that were worst hit, with prices losing as much as 6% on the day and hitting a new 4 week low in the process. The owner of budget fashion retailer Primark was hit by spiralling costs triggered by rises in the price of cotton and further input costs. The retailer is having to cut profit margins to help absorb these heightened costs in a tactic to maintain demand at a time when consumers are feeling the pinch. Naturally investors react badly to any cut in profit margins and the reaction to this one has been no different, even though some may have expected it considering peer Hennes & Moritz suffered a similar fate last month with their respective earnings having employed a similar tactic.

UK earnings continue in full flow tomorrow with investors focusing on Royal Dutch Shell, who are expected to report a rise of 22% in first quarter profits. Earnings from WPP, Unilever and Hammerson will also warrant attention, as will US GDP later in the afternoon.

Tomorrow will also give investors a chance to react to the FOMC rate decision and of any clues Fed Chairman Ben Bernanke gives towards an exit strategy from the Fed’s $600bn asset purchasing programme which ends in June.”

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