The FTSE 100 finished higher in London on Wednesday, but took a back seat to mid-caps, ahead of the next set of minutes from the Federal Open Market Committee.
The FTSE 100 index closed up 10.11 points, 0.1%, at 8,283.43. The FTSE 250 ended up 201.04 points, 1.0%, at 21,187.19, and the AIM All-Share closed up 2.77 points, 0.4%, at 776.81.
The Cboe UK 100 ended up 0.2% at 827.64, the Cboe UK 250 closed up 0.6% at 18,541.01, and the Cboe Small Companies ended up 0.2% at 16,902.68.
In Europe on Wednesday, the CAC 40 in Paris ended up 0.5%, as did the DAX 40 in Frankfurt.
In New York at the time of the London close on Wednesday, the DJIA was little changed, the S&P 500 was up 0.25 and the Nasdaq Composite was up 0.3%.
London’s lead index had initially shrugged off a tepid start to recoup some of Tuesday’s losses. The early mood was soured somewhat 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 higher than the £1.1 billion most economists were pencilling in.
It comes after the new chancellor Rachel Reeves 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’.
Rob Wood at Pantheon Macroeconomics said: ‘Further revisions could easily change the picture, but Chancellor Racehel Reeves will likely have to raise taxes and borrow more in the medium term to cover spending more on public services.’
Investors attention has been squarely fixed on the outlook for interest rates across the pond this week.
Minutes of the July FOMC meeting could give an indication as to the Fed’s thinking.
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.
At the time Powell said the Fed could lower interest rates, as early as September, if economic data evolves as expected.
The minutes come ahead of Powell’s speech at Jackson Hole.
David Mericle at Goldman Sachs expects Powell to express a ‘bit more confidence in the inflation outlook and to put a bit more emphasis on downside risks in the labor market than in his press conference after the July FOMC meeting, in light of the data released since then.’
The pound was quoted at $1.3070 at the London equities close Wednesday, up from $1.3020 at the close on Tuesday. The euro stood at $1.1138, up against $1.1105. Against the yen, the dollar was trading at JP¥145.35, down compared to JP¥145.67.
On the FTSE 100, JD Sports Fashion led the risers, up 4.0%, ahead of Thursday’s trading statement.
Elsewhere, Mobico, formerly called National Express, rose 16%, after it reiterated guidance and pledged to cut debt which includes plans to North American bus business.
In the six months to June 30, the Birmingham-based transport operator, said pretax loss narrowed to £1.5 million from £41.9 million a year prior. Revenue climbed 7.6% to £1.65 billion from £1.57 billion.
Adjusted operating profit rose 24% to £71.2 million from £57.5 million. Mobico said it ‘remains on track’ for adjusted operating profit to reach between £185 to £205 million for 2024.
Analysts at Jefferies said: ‘After a series of downgrades characterised [financial 2023], a robust interim performance and reiteration of full-year guidance should be well-received.’
Costain advanced 6.8% after the firm highlighted a buoyant order book with contract wins across all sectors.
In the six months to June 30, the Maidenhead, England-based construction and engineering firm said pretax profit doubled to £17.0 million from £8.5 million a year prior.
Adjusted operating profit rose 8.7% to £16.3 million from £15.0 million with margin of 2.5%, up from 2.3% a year ago. Costain said it was on track to hit adjusted operating profit margin targets of 3.5% and 4.5% in 2024 and 2025.
Positively, Costain flagged a ‘high quality’ forward work position of £4.3 billion, more than three times 2023 revenue of £1.33 billion. It was also higher than the £4.0 billion forward work position disclosed a year ago.
But Watkin Jones slumped 33% after the firm warned full-year profit will be lower than expected, reflecting slower market activity in the summer.
This was ‘principally due to the continued uncertainty over the pace of interest rate cuts’, the London-based student accommodation developer and manager said in a statement.
Peel Hunt analyst Clyde Lewis cut financial 2024 underlying pretax profit forecasts by 42% to £7.5 million from £13 million and for the following year to just £3.5 million from £20.5 million. Operating profit for the two years is seen at £10 million and £6 million respectively.
Meanwhile, Rosslyn Data Technologies soared 60%.
The 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 estimates a loss before interest, tax, depreciation and amortisation of £3.3 million for the financial year that ended April 30, worse than £2.4 million a year prior but ahead of its own expectations.
Brent oil was quoted at $77.29 a barrel at the London equities close Wednesday, down from $77.41 late Tuesday.
Gold was quoted at $2,507.72 an ounce, against $2,512.24 at the close on Tuesday.
The corporate calendar in London on Thursday sees a trading statement from retailer JD Sports Fashion and full-year results from recruiter Hays.
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