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.”

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.