London’s FTSE 100 moved higher in early trade on Wednesday, boosted by some strong corporate updates, while the dollar marched on as a tempering of US interest rate cut zeal continued.
The FTSE 100 index traded up 13.14 points, 0.2%, at 8,319.68. The FTSE 250 was up 26.44 points, or 0.1%, at 20,976.09, and the AIM All-Share added 0.61 of a point, 0.1%, at 734.77.
The Cboe UK 100 was up 0.1% at 832.85, the Cboe UK 250 rose 0.2% to 18,557.75, and the Cboe Small Companies lost 0.2% at 16,848.94.
The CAC 40 in Paris was flat, and Frankfurt’s DAX 40 added 0.5%.
In New York on Tuesday, the Dow Jones Industrial Average and S&P 500 ended marginally lower. The Nasdaq Composite added 0.2%.
The FTSE 100 index traded down 29.08 points, 0.4%, at 8,289.16. The FTSE 250 was down 34.05 points, or 0.2%, at 20,872.55, and the AIM All-Share was down just 0.10 of a point at 734.85.
The Cboe UK 100 was down 0.4% at 829.88, the Cboe UK 250 fell 0.1% to 18,438.95, and the Cboe Small Companies lost 0.1% at 16,921.46.
The CAC 40 in Paris was down 0.1% but Frankfurt’s DAX 40 added 0.1%.
In Tokyo on Wednesday, the Nikkei 225 lost 0.8%, but in China, the Shanghai Composite was 0.5% higher. In Hong Kong, the Hang Seng Index was up 1.4%. Sydney’s S&P/ASX 200 added 0.1%.
The pound fell to $1.2970 early Wednesday, from $1.2973 at the time of the London equities close on Tuesday. Versus the dollar, the euro ebbed to $1.0780 from $1.0808. Against the yen, the greenback jumped to JP¥152.49 from JP¥151.06.
‘The dollar continues to benefit from a wide range of supporting factors. US 10-year Treasury yields have risen by 15bp since the start of the week, the 2-year USD overnight index swap is inching higher again with only 37bp of Fed easing now in the price, oil prices are rebounding and the proximity to a closely contested US election can continue to favour deleveraging and defensive repositioning,’ analysts at ING commented.
‘For now, the most interesting G10 pair remains USD/JPY. After clearing the 151.3 200-day moving average level, there is no clear technical resistance level into 155.0.’
Central bankers will be in focus in what is an otherwise quiet day on the economic calendar.
Bank of England Governor Andrew Bailey and European Central Bank President Christine Lagarde have speak on Wednesday. The Bank of Canada, meanwhile, announces an interest rate decision at 1445 BST.
Analysts at Commerzbank commented: ‘After the developments of the past few weeks, there is much to suggest that it will accelerate the pace of rate cuts. Just a few weeks ago, BoC Governor Tiff Macklem hinted that larger moves might be appropriate at upcoming meetings. Initially, the market was doubtful, but with inflation recently falling by a surprisingly large margin and now threatening to undershoot the target, sentiment has changed. The surprise has become part of a remarkable period of disinflation in which price pressures have nearly collapsed.’
In London, advertising firm WPP was the best large-cap performer, adding 4.6%. It backed guidance after a third-quarter revenue rise, though it cautioned on a tough comparative and tricky market conditions for the final stretch of the year.
Third-quarter revenue rose 1.4% on-year to £3.56 billion, the advertising firm said. Excluding pass-through costs, however, revenue fell 2.6% to £2.77 billion.
It won deals with the likes of Amazon, Unilever and Starbucks during the quarter.
For the whole of 2024, it still expects like-for-like revenue, excluding pass-though costs, outcome ranging from a 1% fall to flat from 2023. It said the fourth-quarter is ‘facing a tougher comparative’ than the third, as well as ‘macro uncertainty’.
Barratt Redrow rose 3.1%. It said it is ‘beginning to see more stable market conditions’ in the housebuilding sector.
The company, now in an ‘exciting new chapter’ with the tie-up of Barratt Developments and Redrow now in force, warned it may still take some time for consumer confidence to recover.
‘Long-term housing market fundamentals continue to reflect a significant imbalance between housing supply and demand. The new government has demonstrated that it is committed to improving the planning system and addressing funding challenges in the affordable housing sector. Whilst these supply-side reforms will also take some time to be fully implemented, we are confident that they will help to unlock permissioned land supply and the delivery of more high-quality, sustainable homes across the country,’ the company said.
Also rising, Reckitt climbed 2.8%. It said its third-quarter business was in line with guidance, with revenue in its Health and Hygiene arms improving, though there was a decline in the Nutrition division amid ‘supply-related challenges’.
The consumer goods firm, with brands such as Air Wick and Dettol in its stable, said net revenue in the third-quarter fell 4.0% on-year to £3.46 billion. On a like-for-like basis, it weakened 0.5%.
Hygiene revenue fell 1.4% on a reported basis but increased 2.1% like-for-like. Health revenue was down 0.4%, but up 3.2% like-for-like.
Reckitt’s hygiene brands include Vanish and Harpic. Among its Health products are Nurofen and Strepsils.
In Nutrition, which includes the Enfamil baby formula products, revenue dropped 21%, and 17% like-for-like.
Nutrition’s performance was ‘primarily impacted by around £100 million of supply-related challenges from the Mount Vernon tornado in July, which reflects a better-than-expected recovery of inventories.’
In July, the firm said the tornado in Indiana struck a third party warehouse ‘which sustained significant damage’. The site in Mount Vernon is ‘important’ for the Mead Johnson Nutrition business, Reckitt explained in July, as it houses a ‘mix of raw materials and finished products’.
Hochschild Mining was the best mid-cap performer, up 6.1%, with the stock getting a boost from strong output figures, as well as a robust gold price.
‘Hochschild Mining’s third quarter has been the strongest in almost five years and we expect to meet our full year production target. In Brazil, our new Mara Rosa mine has been steadily ramping up to full production rates in the period and the Inmaculada flagship mine in Peru has continued to deliver the benefits from our continuous improvement programme. Furthermore, given the current strength of our balance sheet, we were able to repay approximately $45 million of debt. With the current metal price momentum along with the forecast strong production in the last quarter, we can look forward to further robust cashflow generation,’ Chief Executive Officer Eduardo Landin said.
Attributable gold equivalent production in the third-quarter of 2024 improved to 96,330 from 81,620 a year prior, and 83,030 a quarter earlier.
The firm added: ‘The company reiterates that it is on track to meet its overall attributable production target for 2024 of 343,000-360,000 gold equivalent ounces.
‘The impact from Mara Rosa’s previously disclosed ramp-up issues during Q2 will be offset by stronger production at Inmaculada resulting from the mine’s ongoing continuous improvement projects.’
Gold rose to $2,752.61 an ounce early Wednesday, up from $2,739.35 late Tuesday afternoon. It hit a record high above $2,753 earlier Wednesday morning.
‘One of the main factors behind this surge is the electoral uncertainty in the United States, which has caused greater volatility in financial markets. As the elections draw near, speculations about potential changes in the country’s economic policy are prompting investors to seek more stable assets, such as gold. This behaviour is expected in highly polarized election periods, where political outcomes may impact the economic future,’ XS.com analyst Antonio Ernesto Di Giacomo commented.
‘Another key factor is the increasing demand for gold as a safe haven, which has risen by more than 30% this year. Geopolitical tensions, especially the war in the Middle East, have raised uncertainty levels worldwide. Investments in gold typically rise during periods of conflict as investors look to safeguard their capital against international instability. Additionally, expectations of more flexible monetary policies, such as potential interest rate cuts by central banks, contribute to the increased demand for this precious metal.’
Back in London, Cordel rose 8.5%. Its technology for electrified lines was backed by UK rail infrastructure manager Network Rail.
‘This Network Rail certification covers the entire Cordel pipeline, with point cloud capture from Cordel Mobile Laser Scanning systems flowing seamlessly through Cordel’s automated AI processing. Cordel’s accurate height and stagger measurements either confirm standards compliance or identify where deviation is developing, so that timely corrective action can be taken to prevent incidents. Up-to-date height and stagger measurements also help optimise other infrastructure interventions, such as allowing the track to be overlifted higher to increase maintenance intervals,’ Cordel added.
A barrel of Brent was quoted at $75.27 early Wednesday, down from $75.86 late Tuesday.
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