FTSE opens higher on RBS news but spotlight today on BoE rate decision

The FTSE 100 opened higher, up 0.26% at 7,682.02, buoyed by a higher close on Wall Street, rising oil prices and Royal Bank of Scotland news. 

Asian markets also traded higher across the board except for Singapore, with the Hang Seng up 0.9% at 30,805.88 and the Nikkei 0.3% higher at 22,486.01. 

The biggest surprise this morning came from BT as the company’s shares plunged 7.59% to 238.60 after the telecoms firm revealed plans to plug an £11.3 billion gap in its pension budget, to cut 13,000 jobs and to move its London headquarters. 

The strategy update was released as part of the company’s fourth quarter results which showed a pre-tax profit of £872 million, broadly in line with expectations, and a 1% increase in adjusted EBITDA to £2.1 billion. In contrast, Royal Bank of Scotland shares started the day on a positive note, up 6.12% at 289.60, after the bank agreed to a civil penalty to settle a mortgage probe in the US. 

RBS said it will pay $4.9 billion in fines to settle an investigation by the US Department of Justice into mis-selling of residential mortgage-backed securities between 2005 and 2007. The UK government plans to re-privatise RBS by selling £3 billion before the end of 2019 but was holding back until the DoJ dispute was resolved. All eyes today will be on the Bank of England rate decision due to come out at 11.00. 

A few weeks ago a rate increase to 0.75% from the current 0.50% seemed a given but after a series of weak economic data the decision will be less straight forward. If there is a move higher it will have the capacity to stymie house price growth and consumer spending and will in the medium term affect home builders and high street shops.