Stocks in Europe were in the green heading into Wednesday afternoon as markets digest a raft of earnings and await the US interest rate decision.
The FTSE 100 index shot up 116.07 points, or 1.4%, at 8,390.48. But the FTSE 250 rose 135.79 points, 0.5%, at 21,568.30, while the AIM All-Share added 4.37 points, 0.6%, at 782.53.
The Cboe UK 100 was up 1.2% at 837.75, the Cboe UK 250 added 0.5% to 18,892.29, but the Cboe Small Companies added 0.1% to 17,316.61.
The CAC 40 in Paris rose 1.4%, while Frankfurt’s DAX 40 traded 0.5% higher.
In New York, the Dow Jones Industrial Average is called up 0.4%, the S&P 500 up 1.0% and the Nasdaq Composite 1.5% higher. The S&P and Nasdaq had fallen on Tuesday, as tech stocks struggled.
But the mood was optimistic ahead of the Federal Reserve interest rate decision later.
‘The FOMC meeting provides an opportunity for the Fed to inform markets over the pathway for rates, with a September [cut] currently being deemed as a foregone conclusion by many. With inflation still stuck above target, the recent declines have helped push expectations of a dramatic pivot from the Fed in September. However, today’s FOMC meeting provides the opportunity for Powell to better align market and Fed expectations. Whether the tentative signs of weakness within the jobs market will be enough to bring a strong reaction from Fed remains to be seen. However, coming at a time when we are seeing significant jitters around tech earnings, there is a hope that Powell will provide grounds for optimism within markets going forward,’ Scope Markets analyst Joshua Mahony commented.
The Fed decision is released at 1900 BST.
Mahony noted eurozone inflation data gave ‘bulls less to celebrate’.
‘The final stretch back down to 2% remains a difficult hurdle to overcome, and today‘s report will likely create jitters for those expecting a September rate cut that is currently being priced at a 68% chance,’ the analyst added.
The rate of inflation in the single currency area picked up to 2.6% in July, from 2.5% in June. It had been expected to ease to 2.4%, according to FXStreet cited consensus.
It takes the rate of inflation back to where it stood in May.
The annual core consumer price inflation rate was unmoved at 2.9%, but had been expected to ease to 2.8%, according to FXStreet.
On a monthly basis, consumer prices were flat between July and June. They had risen 0.2% in June from May. Core consumer prices fell 0.2% on-month in July, after a 0.3% rise in June.
Despite July’s data showing the first monthly fall in core prices since November, the year-on-year readings suggest the final stretch of the inflation fight will be a tricky one.
July’s eurozone inflation data threatened to be red-hot, after a reading from the single currency bloc’s largest economy on Tuesday.
According to Destatis, Germany’s rate of annual consumer price inflation accelerated to 2.3% in July, from 2.2% in June, where it had been expected to remain this month.
The pound was quoted at $1.2837 early Wednesday afternoon, up from $1.2829 at the time of the London equities close on Tuesday. The euro stood at $1.0830, up from $1.0808. Against the yen, the dollar was trading at JP¥150.50, down markedly from JP¥153.88, on the back of a Bank of Japan rate hike.
In London, AJ Bell analyst Russ Mould noted it was commodities coming ‘to the rescue’ for the FTSE 100.
Antofagasta rose 4.1%, Anglo American was up 3.8% and Glencore added 3.7%.
A buyback and better-than-expected profit propelled lender HSBC 3.7% higher.
A rise in oil prices, after the death of a Hamas chief in a strike in Iran stoked geopolitical risk, supported Shell and BP. The duo rose 3.1% and 2.3%.
Brent oil was quoted at $79.97 a barrel early Wednesday afternoon, rising from $78.51 at the time of the closing bell in London on Tuesday.
But drugmaker GSK missed out on the FTSE 100 rally, as unfavourable results for its Vaccines division overshadowed a guidance raise. Shares fell 1.8%.
The firm now expects revenue will rise between 7% and 9% at constant currency for 2024, its view increased from its previous 5% to 7% range. GSK had expected growth ‘towards the upper part’ of that range.
Constant currency core operating profit growth of 11% to 13% is expected, as GSK raised its outlook from 9% and 11%.
Rathbones rose 5.1%. The London-based wealth manager said funds under management and administration increased 3.4% to £108.91 billion at June 30, from £105.34 billion in December.
Rathbones said: ‘Net FUMA flows improved significantly in the second quarter. While factors which have resulted in elevated outflows remain relevant, a significant reduction in gross outflows combined with continued strength in gross inflows saw net outflows reduce from £600 million in the first quarter to flat in the second quarter.’
Metro Bank jumped 25% as it raised guidance. Its return on tangible equity outlook has been increased to ‘mid-to-upper single digit in 2025, double-digit in 2026 and mid-to-upper teens thereafter’. Its RoTe outlook was previously ‘low-single digit in 2025, increasing to high-single digit in 2026 and low-mid teens thereafter’.
The lender’s total underlying revenue in the six months to June 30 declined 18% to £234.0 billion from £285.6 billion a year prior. It swung to a pretax loss of £33.5 million from profit of £15.4 million.
Gold was quoted at $2,419.32 an ounce early Wednesday afternoon in London, rising from $2,384.97 at the time of the equities close on Tuesday.
Before the Fed decision, there is a US ADP jobs report at 1315 BST. The reading comes 48 hours before the official nonfarm payrolls data.
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