FTSE opens lower thanks to ex dividends Rio Tinto rises and Standard Chartered bounces back

The FTSE 100 opened lower by 32 pts on Wednesday, but remained above the 5800 level in early trading as investors awaited the Bank of England’s quarterly inflation report.

Much of the early FTSE weakness was actually dictated by heavyweight stocks such as BP and Shell going ex-dividend, which knocked 25.41 points off the FTSE today from yesterday’s close. In that sense, the 32 points weakness is being exacerbated somewhat.

The focus for the morning session will be on the Bank of England’s quarterly inflation report, which is expected to see growth figures for the year revised to flat from a previous estimate of 0.8% for 2012. Given the shocking slump in GDP for the last quarter of -0.7%, the market will also be very keen to hear of how the BoE expects UK output to bounce back in quarters three and four. Alongside this, revisions on inflation forecasts too, which will help investors to gauge the potential for more asset purchases (QE) from the BoE later this year after Mervyn King and his committee members increase purchases recently by £50bn to £375bn.

The BoE inflation report is likely to play a key role in the price of the pound sterling and the FTSE 100 today as a result.

Standard Chartered shares bounced back in early trading, rising 5% after suffering heavy double digit falls yesterday. Share prices had slumped 20% so far this week before the start of trading today, wiping £8.2bn off the banks market cap. Does today’s rise display a turnaround in confidence in the bank? No. However, what we have seen is some traders buy into the banks shares looking for a bargain after the sharp falls this week. Much of the falls this week has been exacerbated by the fact that investors have been quick to draw similarities with the similar Barclays and HSBC scandals, which also triggered heavy share price falls and the large degree of uncertainty over the implications of the allegations made by the New York State regulator. This time around there is uncertainty over whether the regulator will remove the banks state license and this could have implications on the banks ability to clear dollars, which could prove pivotal to the bank, even though 90% of its revenue comes from outside of the US’s borders.

Rio Tinto shares climbed 1% after the miner reported half year figures towards the top end of market consensus. Rio saw its underlying earnings fall 34% to $5.2bn, which was towards the best of expectations from analysts, with the majority of the fall in earnings dictated by a fall in prices. Despite this, Rio remained confident on Chinese outlook, predicting that Chinese growth would come in at around the 8% mark this year and activity would pick up in the second half of the year as Chinese infrastructure stimulus works its way through.

Old Mutual shares fell 1% despite reporting solid earnings this morning. The firm saw profits increase 12% to £791m and funds under management fall 2% to £260.7bn. The firm’s shares price hit a new four and a half year high yesterday, and so there has been a good run up in prices towards today’s announcement and so as such, it is no surprise to see investors lock in some gains today.