Countdown to Super Thursday begins

In mid-morning trading the FTSE 100 is edging lower as traders await the so-called Super Thursday’s announcements. 

Source: Bloomberg

The London market is losing ground as the clock is ticking closer to the Bank of England’s array of announcements. The interest rate decision has now become a sideshow act, and all eyes will be on the voting breakdown. As two members are anticipated to vote in favour of an interest rate rise, this could be the warning shot to the UK that rates will not remain at all-time lows forever.

Mark Carney has already suggested that the interest rates will rise before the year is out, and today’s change to the announcing schedule could be a sign of more change to come.

Shares in Randgold Resources are on the rise this morning after the company announced a solid second-quarter trading update. The gold miner’s production costs declined and the production levels as the company aims to cut its overheads while applying pressure to its smaller competitors by keeping supply of gold high.

The price of gold is coming under pressure due to the Federal Reserve meeting next month, but Randgold’s production costs are approximately 63% to the current price of the metal, and the South African miner is well positioned to endure additional falls in gold.

RSA revealed a swing to first-half underlying profits but Zurich isn’t prepared to pay up to £6 for the stock, and the share price has gone into retreat. Stephen Hester’s restructuring of the troubled insurer is going well, and the fact that it is on Zurich’s radar confirms Mr Hester’s plan is working. RSA’s cost-cutting scheme is ahead of schedule and if even if Zurich doesn’t up its offer for RSA, Stephen Hester’s turnaround still underway and that will add value in the long-term.

We are expecting the Dow Jones to open five points lower, at 17,535, as the US market is taking its cue from the European equivalents. The disappointing ADP employment numbers yesterday set the tone for today’s jobless claims announcement, and tomorrow’s jobs report.

Traders are still torn over whether the Fed will hike rates next month, and dealers don’t want to be long in case rates do rise.


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