Stocks in Europe opened higher on a busy Thursday filled with economic readings from the US and Europe as well as comments from US Federal Reserve Chair Jerome Powell.
The US data today will be followed on Friday by the Fed’s preferred inflation gauge of core personal consumption expenditures.
‘The global economy is settling into a newfound stability and central banks can continue to cautiously cut rates, said the OECD yesterday, but warned that the major central banks should maintain their data-dependent approach and be ’prudent’ while cutting their rates,’ Swissquote’s Ipek Ozkardeskaya remarked. ‘We are all looking at you Jerome Powell!’
There is, Ozkardeskaya added, an expectation that ‘the market and the Fed will come back to their senses regarding their overly doveish policy outlook’.
The FTSE 100 index was up 46.37 points, 0.6%, at 8,317.07. The FTSE 250 was up 209.76 points, 1.0%, at 20,965.20, and the AIM All-Share was up 3.50 points, 0.5%, at 744.98.
Near the top of the 100, Diageo - which holds its annual general meeting on Thursday - gained 5.0%.
Ahead of the meeting, Chief Executive Debra Crew said that while the ‘global environment remains challenging for both our industry and Diageo’, its ‘expectations are unchanged’.
‘We have made good progress on our strategic initiatives, including our US route-to-market enhancements, and in Nigeria we are progressing well towards completion of the agreement to restructure our business model there...[I] am confident that when the consumer environment improves, growth will return and the actions we are taking will position us well to outperform the market,’ she added.
Halma rose 1.3%.
The safety equipment group said for the current financial year ending March 31 its guidance for ‘good organic constant currency revenue growth’, and an adjusted Ebit margin around 21%, is unchanged.
Halma expects to report good organic constant currency revenue growth for its first half with an adjusted Ebit margin ‘modestly higher’ than the prior year’s. Order intake in the year so far is ‘ahead of both revenue and the comparable period last year’.
Among smaller companies, Marlowe plummeted 36%.
Spin-off Optima Health, Marlowe’s former occupational health division, has started trading on AIM following its initial public offering.
It has around 88.8 million ordinary shares in issue, having suggested a price of £2.14 each with an anticipated market capitalisation of around £190 million.
The Cboe UK 100 was up 0.6% at 832.88, the Cboe UK 250 was up 1.1% at 18,454.46, and the Cboe Small Companies was up 0.1% at 16,964.12.
These were despite somewhat downbeat consumer confidence data from the UK, leading Deutsche Bank analysts to ask: ‘The new government has persistently talked up the economic and fiscal challenges facing the UK economy, but has it steered too far into pessimistic territory?’
According to the British Retail Consortium’s consumer sentiment monitor, the personal financial situation tracker fell to negative 6 points in September from positive 1 point in August. The personal saving index fell to negative 9 from August’s negative 4.
The index tracking the assessment on the state of the economy fell ‘significantly’ to minus 21 this month from minus 8 in August.
‘What do we find? A growing residual, consistent with the view that ’something else’ may be impacting sentiment,’ Deutsche Bank said, noting that ‘while the UK PMIs remain healthy, firms reported Budget uncertainty impacting employment and investment decisions’.
UK car production fell last month, continuing a trend seen across the year. The number of cars built in UK factories was 8.4% lower in August from the same month in 2023.
The Society of Motor Manufacturers & Traders said 41,271 new cars left production lines, 3,781 fewer than last August.
The trade body said the decline continues this year’s trend as factories wind down production of key models and prepare for new, mainly electric models.
Meanwhile in New York, Prime Minister Keir Starmer will address world leaders at the UN General Assembly.
PA reported that Starmer will use his speech to say the UK is returning to ‘responsible global leadership’ because it is in British interests to address problems around the world.
Starmer is also meeting US business leaders to push for investment in the UK, with executives from Blackstone, Citigroup and Macquarie among those set to attend a roundtable event hosted by the prime minister.
In European equities on Thursday, the CAC 40 in Paris was up 1.2%, while the DAX 40 in Frankfurt was up 1.0%.
The pound was quoted at $1.3349 early on Thursday in London, down mildly compared to $1.3351 at the equities close on Wednesday. The euro stood at $1.1150, down against $1.1155. Against the yen, the dollar was trading at JP¥145.07, higher compared to JP¥144.44.
‘The US dollar rebounded yesterday against most majors, but the outlook remains negative for the greenback as the Fed’s major peers keep a cautious doveish bias as inflation eases, without however feeling the urge to boost their economies before making sure that inflation goes into a deeper sleep,’ Ozkardeskaya commented.
In Asia on Thursday, the Nikkei 225 index in Tokyo was up 2.8%. In China, the Shanghai Composite was up 3.6%, while the Hang Seng index in Hong Kong was up 3.8%. The S&P/ASX 200 in Sydney closed up 1.0%.
China’s top leaders, including President Xi Jinping, have admitted that the economy was facing new ‘problems’ and vowed to resolve a long-running housing sector crisis, state media said.
The ruling Communist Party convened a meeting of its top body, the Politburo, to ‘analyse and study the current economic situation’.
Politburo members agreed on the need to ‘further improve the focus and effectiveness of policy measures’ aimed at lifting the economy and vowed to ‘respond to the people’s concerns’ about the economic malaise.
Beijing would ‘adjust housing purchase restriction policies, lower interest rates on existing mortgage loans... and promote the construction of a new model for real estate development’, the Xinhua news agency reported.
In the US on Wednesday, Wall Street ended mostly lower, with the Dow Jones Industrial Average down 0.7%, the S&P 500 down 0.2% and the Nasdaq Composite marginally higher.
Brent oil was quoted at $71.28 a barrel early in London on Thursday, down from $74.38 late Wednesday.
‘US crude slipped below the $70pb [mark] again, and remains under a visible selling pressure this morning,’ observed Swissquote’s Ozkardeskaya. Investors continue to trim their net speculative long positions in crude despite price supportive factors.
Gold was quoted at $2,664.00 an ounce, higher against $2,656.90.
Still to come on Thursday’s economic calendar, there are the GDP, jobless and other US data releases, plus comments from European Central Bank President Christine Lagarde and Vice-President Luis De Guindos.
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