London midday: Stocks pare losses as investors mull BoJ move

(Sharecast News) - London stocks had pared earlier losses to trade flat by midday on Tuesday as investors mulled a surprise policy shift from the Bank of Japan. The FTSE 100 was steady at 7,358.26.

Earlier, the BoJ shocked markets as it held its benchmark interest rates steady but said it was widening its yield target range.

The Bank left the policy balance rate unchanged at -1.0% and the 10-year yield control target unchanged at zero. However, it also announced a surprise tweak to the yield control curve policy meaning that it will now allow the 10-year bond yield to fluctuate in a range of 0.5% above or below the target of zero, versus 0.25% previously.

The BoJ said in a statement that the change to the yield curve control policy is expected to "enhance the sustainability of monetary easing".

The yen strengthened and bonds sold off after the announcement.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "The decision is being read as a sign of testing the water, for a potential withdrawal of the stimulus which has been pumped into the economy to try and prod demand and wake up prices.

"But the Bank is still staying firmly plugged into its bond purchase programme, claiming this is just fine tuning, not the start of a reversal of policy."

On home shores, Nationwide said it expects house prices to fall by around 5% next year.

Chief economist Robert Gardner said: "The risks are skewed to the downside, but there is still a good chance that we can achieve a relatively soft landing next year with activity stabilising modestly below pre-pandemic levels and house prices edging lower, perhaps by around 5%.

"The Bank of England is likely to raise interest rates a little further, although in recent years most borrowers have opted for fixed rate mortgages which are linked to longer term interest rates that may have already peaked. If so, this will help provide some support to affordability as will solid gains in nominal earnings growth and modestly lower house prices."

With only days to go until Christmas, there was just a smattering of corporate news.

Petrofac tumbled after the oilfield services provider warned that it expects a full-year group EBIT loss of around $100m due to challenges in the Engineering & Construction segment.

Software firm Sage was also under pressure after a downgrade to 'sell' at UBS.

International distribution group Bunzl was in focus after announcing the sale of its UK healthcare division to Mediq and buying four other businesses.

Elsewhere, Irn Bru maker AG Barr said it has taken full ownership of plant-based milks business Moma Foods after buying the remaining 38.2% stake from founder Tom Mercer and the other minority shareholders for £3.4m.

Hilton Food Group said it has signed a long-term collaboration in Singapore with Country Foods.

Market Movers

FTSE 100 (UKX) 7,358.26 -0.04% FTSE 250 (MCX) 18,529.34 -0.64% techMARK (TASX) 4,319.58 -0.57%

FTSE 100 - Risers

Antofagasta (ANTO) 1,496.00p 1.70% Glencore (GLEN) 545.00p 1.53% Fresnillo (FRES) 873.60p 1.09% Endeavour Mining (EDV) 1,717.00p 0.94% HSBC Holdings (HSBA) 500.30p 0.92% NATWEST GROUP (NWG) 261.00p 0.66% BP (BP.) 469.15p 0.55% Rio Tinto (RIO) 5,638.00p 0.52% Sainsbury (J) (SBRY) 221.10p 0.45% Kingfisher (KGF) 228.20p 0.44%

FTSE 100 - Fallers

Ocado Group (OCDO) 616.20p -2.81% International Consolidated Airlines Group SA (CDI) (IAG) 126.48p -2.75% Sage Group (SGE) 752.80p -2.39% Auto Trader Group (AUTO) 511.60p -1.95% Airtel Africa (AAF) 111.20p -1.59% Hargreaves Lansdown (HL.) 837.40p -1.57% Scottish Mortgage Inv Trust (SMT) 717.40p -1.56% Schroders (SDR) 432.50p -1.53% Intertek Group (ITRK) 3,877.00p -1.52% Frasers Group (FRAS) 721.00p -1.37%

FTSE 250 - Risers

Volution Group (FAN) 341.00p 2.56% Bytes Technology Group (BYIT) 387.20p 2.22% Ferrexpo (FXPO) 162.40p 1.95% Johnson Matthey (JMAT) 2,156.00p 1.94% Investec (INVP) 499.00p 1.73% Kainos Group (KNOS) 1,576.00p 1.61% Bank of Georgia Group (BGEO) 2,510.00p 1.41% Lancashire Holdings Limited (LRE) 609.00p 1.16% TBC Bank Group (TBCG) 2,170.00p 0.93% Centamin (DI) (CEY) 109.05p 0.93%

FTSE 250 - Fallers

Aston Martin Lagonda Global Holdings (AML) 168.55p -4.77% Hammerson (HMSO) 22.60p -3.34% Warehouse Reit (WHR) 103.40p -3.18% Harbour Energy (HBR) 297.90p -3.03% Shaftesbury (SHB) 353.00p -2.86% National Express Group (NEX) 132.40p -2.86% Moonpig Group (MOON) 105.90p -2.84% Capital & Counties Properties (CAPC) 100.40p -2.81% Assura (AGR) 53.15p -2.66% 888 Holdings (DI) (888) 82.65p -2.54%