Stock prices in London opened a tad higher on Wednesday morning, as investors keenly await upcoming Fed’s minutes which may give a preview if Chair Jerome Powell will make any comments on monetary policy on Friday.
The FTSE 100 index opened up just 0.98 of a point at 8,274.30. The FTSE 250 was up 42.13 points, 0.2%, at 21,028.28, and the AIM All-Share was up 1.05 points, 0.1%, at 775.09.
The Cboe UK 100 was up slightly at 826.40, the Cboe UK 250 was up 0.2% at 18,459.16, and the Cboe Small Companies was up 0.2% at 16,912.39.
In European equities on Wednesday, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was up 0.1%.
In the US on Tuesday, Wall Street ended lower, with the Dow Jones Industrial Average and the S&P 500 both down 0.2% and the Nasdaq Composite down 0.3%.
Across the Atlantic, investors are keen to scrutinise the Fed’s minutes, which are scheduled for release on Wednesday. These may give a preview of what, if any, comments Fed Chair Powell makes on monetary policy on Friday.
At the conclusion of its two-day meeting in July, FOMC members voted to maintain the federal funds rate range at 5.25% to 5.50%. The vote was unanimous.
The federal funds rate has been at that level since July 2023, when the Fed last hiked rates, which took the range to its highest level in more than two decades.
Meanwhile, the Jackson Hole central bank economic symposium in Wyoming will get underway on Thursday, bringing together central bankers and finance ministers, and academics and financial market players from around the world.
Analysts at Brown Brothers Harriman said: ‘While some may be looking for any hints on policy, we do not think any decisions will be made until the actual September 17/18 FOMC meeting given the Fed‘s data-dependency mode. However, we expect Chair Powell and his colleagues to set the table for a September cut while stressing that the rate path remains data-dependent, and that the US economy remains relatively robust.’
In the UK, it looks like Chancellor Rachel Reeves will be facing further challenges ahead of her first budget this autumn after official figures revealed government borrowing jumped by far more than expected last month.
The Office for National Statistics said public sector net borrowing stood at £3.1 billion last month – £1.8 billion more than a year ago and the highest July borrowing since 2021.
The total for July was £3 billion more than predicted by the UK’s official forecaster, the Office for Budget Responsibility, and higher than the £1.1 billion most economists were pencilling in.
It comes after the new chancellor last month accused the previous Conservative government of leaving a £21.9 billion black hole in the public finances, through unfunded commitments that she said it had ‘covered up’.
Chief Secretary to the Treasury Darren Jones said: ‘Today’s figures are yet more proof of the dire inheritance left to us by the previous government.
‘A £22 billion black hole in the public finances this year, a decade of economic stagnation and public debt at its highest level since the 1960s, with taxpayers’ money being wasted on debt interest payments rather than on our public services.’
The pound was quoted at $1.3013 early on Wednesday in London, lower compared to $1.3020 at the equities close on Tuesday. The euro stood at $1.1112, higher against $1.1105. Against the yen, the dollar was trading at JP¥146.12, higher compared to JP¥145.67.
In the FTSE 100, Barratt Developments shed 0.2%. In the FTSE 250, Redrow edged up 0.3%.
The UK Competition & Markets Authority said it will consider undertakings offered regarding Barratt’s takeover of Redrow, as the deal nears completion.
‘The CMA considers that there are reasonable grounds for believing that the undertakings offered by the parties, or a modified version of them, might be accepted by the CMA to remedy the substantial lessening of competition identified by the CMA,’ the watchdog said.
The CMA has until October 18 to decide whether to accept the undertakings, with the possibility to extend this time frame to December 13 if it considers there are special reasons for doing so.
In August, the UK watchdog said Barratt’s planned acquisition of fellow housebuilder Redrow raises competition concerns in one local area. They said it has found concerns about the Redrow merger in the area around a Barratt project in Whitchurch.
Barratt in February agreed an all-share takeover offer for its smaller peer Redrow, valuing the latter at £2.52 billion.
Other housebuilders were mixed. Persimmon rose 0.2%, whilst Taylor Wimpey lost 0.6%.
In the FTSE 250, Elementis rose 2.9%.
Barclays upped its broker rating for the London-based chemicals company to ’overweight’ from ’equal weight’.
Victrex, a Lancashire-based supplier of high performance polymers, rose 1.4%. Jefferies raised its broker rating to ’hold’ from ’underperform’.
On AIM, Watkin Jones plummeted 31%.
The London-based student accommodation developer and manager said that market activity through the summer has been slower than anticipated, principally due to the continued uncertainty over the pace of interest rate cuts.
Based on this it now believes that it is unlikely that it will close any further transactions before the financial year end on September 30.
Further, Watkin Jones warned that the lower number of transactions in financial 2024 will have a consequential impact on results in financial 2025.
On the other hand, Rosslyn Data jumped 53%.
The Portsmouth, England-based data management and analytics service provider said that it has won a new three-year contract with ‘one of the world’s largest technology companies’, which has a minimum revenue value of £2 million.
In a separate trading update, the company said it anticipates to announce a loss before interest, tax, depreciation and amortisation of £3.3 million for the financial year ended April 30, worse than £2.4 million a year prior but ahead of its own expectations. ‘The better-than-expected adjusted Ebitda performance reflects the board’s strategic decision to prioritise sustainable growth and focus on the quality of revenues,’ it said.
Rosslyn’s total contract pipeline as at April 30 was £3.3 million, down 8.3% from £3.6 million a year prior.
In Asia on Wednesday, the Nikkei 225 index in Tokyo was up 0.3%. In China, the Shanghai Composite was down 0.4%, while the Hang Seng index in Hong Kong was down 0.8%. The S&P/ASX 200 in Sydney closed up 0.2%.
Brent oil was quoted at $76.99 a barrel early in London on Wednesday, down from $77.41 late Tuesday.
Gold was quoted at $2,510.10 an ounce, lower against $2,512.24.
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