Stock prices in London were up at midday on Thursday, as investors held onto hopes that interest rates may soon hit their peak.
The FTSE 100 index was up 33.15 points, or 0.5%, at 7,353.68. The FTSE 250 was up 77.97 points, or 0.4%, at 18,304.46, and the AIM All-Share was up 1.43 points, or 0.2%, at 735.88.
The Cboe UK 100 was up 0.4% at 732.63, the Cboe UK 250 was up 0.3% at 16,027.03, and the Cboe Small Companies was up 0.4% at 12,828.54.
On Wednesday, data from S&P Global showed that the UK private sector fell back into contraction in August while the downturn in the eurozone’s private worsened. Meanwhile, data revealed the US private sector edged towards near-stagnation.
The weaker data wasn’t taken as badly as it might have been, however, as it served to prove that the rate hikes implemented by central banks in recent months are starting to have the desired effect of cooling down economic activity. This in turn helped pare back future interest rate expectations.
Interest rates will now remain at the forefront of investors’ minds over the next few days as the Jackson Hole central banking event gets underway.
The symposium begins on Thursday and will run to Saturday, with US Federal Reserve Chair Jerome Powell expected to speak on Friday. Bank of England Governor Andrew Bailey and European Central Bank President Christine Lagarde will also attend the Jackson Hole meeting.
Investors will be eager for clues from the central bankers as to how long the fight against inflation will continue, where interest rates will end up and just how long they will stay at elevated levels.
The dollar was largely on the front foot around midday as attention turned to the Jackson Hole meeting.
The pound was quoted at $1.2685 at midday on Thursday in London, compared to $1.2698 at the London equities close on Wednesday. The euro stood at $1.0854, slightly higher against $1.0850. Against the yen, the dollar was trading at JP¥145.40, higher compared to JP¥144.66.
‘For now, the prevailing view amongst analysts remains bullish for the dollar, with few expecting any signs to emerge from Jackson Hole that could indicate the beginning of the unwinding of the Fed’s monetary tightening,’ said Ricardo Evangelista, senior analyst at ActivTrades.
Currently, markets see an 85% chance of the Fed holding rates steady at its next meeting in September, according to the CME Fed Watch Tool. For the November meeting, markets see a 56% chance of rates remaining unchanged.
These predictions may change should Powell come across as surprisingly dovish on Friday, however.
In London, FTSE 250-listed Liontrust Asset Management jumped 12% after it said it expects to declare its offer to buy GAM unsuccessful, having only secured the support of a third of the Zurich-based firm’s shareholders.
The minimum acceptance condition for the bid was just over 66%, according to an earlier offer document.
Liontrust announced an all-share deal to acquire GAM in May, at the time valuing the company at fr.107 million, around £96.0 million. Liontrust said the offer was equivalent to fr.0.67 per share. GAM shareholders would have just shy of a 13% stake in the enlarged firm.
Liontrust Chief Executive John Ions said on Thursday: ‘We are disappointed we did not win the support of the majority of GAM’s shareholders and are grateful to those GAM and Liontrust shareholders who did back our offer.’
Now, it is back to the drawing board for Liontrust. The firm noted that it would book £11 million in one-off exceptional costs due to the failed takeover of GAM.
Elsewhere in London, Hunting dropped 8.1% despite reporting it had swung to a profit in the first half of the year, as revenue grew by a double-digit percentage.
The London-based international energy services group swung to a pretax profit of $23.1 million in the six months that ended June 30 from a loss of $500,000 a year before, as revenue grew by 42% to $477.8 million from $336.1 million a year prior.
However, the firm noted that it will transfer the manufacturing and assembly operations of its main well testing site from the Netherlands to Dubai, resulting in the closure of a facility at Velson-Noord.
Hunting added that the Titan division’s operating site in Oklahoma City in the US is being closed down as well, with its manufacturing systems being moved to its Pampa, Texas and Monterrey, Mexico facilities.
On AIM, Malvern International surged 14% following an upbeat trading update.
The learning and skills development company reported a jump in revenue in the first half of 2023, boosted by students starting courses next month.
Revenue surged to around £4.8 million in the half, from £2.3 million a year prior. Consequently, Malvern said it expects to return to profit for the period, after reporting a pretax loss of £676,000 the year before.
In European equities on Thursday, the CAC 40 in Paris was up 0.4%, while the DAX 40 in Frankfurt was up 0.4%.
In New York, stocks were mostly seen higher. The Dow Jones Industrial Average is called down 0.1%, while the S&P 500 index and the Nasdaq Composite are called 0.6% and 1.2% higher, respectively.
Brent oil was quoted at $83.11 a barrel at midday in London on Thursday, down from $83.28 at the equities close on Wednesday. Gold was quoted at $1,919.42 an ounce, higher against $1,916.27.
Still to come on Thursday’s economic calendar, the weekly US unemployment claims report will be published at 1330 BST.
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