The FTSE 100 opened higher on Wednesday, as investors bought before this evening’s interest rate decision from the US Federal Reserve and despite falling UK gross domestic product data.
The FTSE 100 index opened up 14.45 points, 0.2%, at 7,557.22. The FTSE 250 was up 48.00 points, 0.3%, at 18,710.12, and the AIM All-Share was up 1.31 points, 0.2%, at 725.22.
The Cboe UK 100 was down 0.1% at 754.23, the Cboe UK 250 was down 0.1% at 16,194.49, and the Cboe Small Companies was down 0.1% at 14,081.42.
In European equities on Wednesday, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was up 0.1%.
Investors on Wednesday morning were digesting some UK economic data, before quickly moving back onto interest rate decisions from central banks across the globe.
In early economic news, UK GDP fell by 0.3% on-month in October, having risen by 0.2% a month earlier. This was worse than expected. According to FXStreet market consensus, analysts were expecting GDP to fall by just 0.1% in October.
In the three months to October, the UK economy was flat compared to the immediately previous period, though 0.7% larger compared to a year before.
It didn’t take long for analysts to shift onto interest rates, though.
‘With the Bank of England expecting to leave interest rates unchanged on Thursday, this is shaping up to be a flatline festive period. GDP has gone nowhere over a three month period, as a bleak October offset some more positive numbers from the end of the summer,’ said Nicholas Hyett, investment analyst at Wealth Club.
‘The question now is when the bank starts cutting rates. Leave it too long and the cure could yet prove worse than the disease ... who would want to be a central banker.’
The Bank of England will announce its interest rate decision on Thursday 1200 GMT, followed by the European Central Bank shortly after.
Before then, however, there is the US Federal Reserve. The latest interest rate decision will be announced at 1900 GMT and a press conference with Fed Chair Jerome Powell follows half an hour later.
Markets are expecting the Fed to keep interest rates unchanged.
Expectations were reinforced after the latest US inflation data landed in line with expectations on Tuesday. According to the Bureau of Labor Statistics, the nation’s yearly inflation rate faded to 3.1% in November, in line with consensus, from 3.2% in October.
In the US on Tuesday, Wall Street ended higher, shaking off pre-Fed nerves. Both the Dow Jones Industrial Average and the S&P 500 closed up 0.5% and the Nasdaq Composite ended up 0.7%.
Elsewhere on the economic calendar on Wednesday, there is a eurozone industrial production reading at 1000 GMT, followed by US PPI data in the afternoon.
The pound was quoted at $1.2533 early on Wednesday in London, lower compared to $1.2549 at the equities close on Tuesday. The euro stood at $1.0785, down against $1.0789. Against the yen, the dollar was trading at JP¥145.83, up compared to JP¥145.60.
In the FTSE 100, Entain rose by 4.6%, making it the best performer in early trade on the index.
Entain said its Chief Executive Officer Jette Nygaard-Andersen has stepped down with immediate effect.
The company’s Non-Executive Director Stella David has been appointed as CEO on an interim basis. David will start this week and will remain in the role until a permanent replacement has been found.
Nygaard-Andersen’s decision to leave comes after the resolution of HM Revenue & Customs’ investigation into the company’s legacy Turkish-facing business.
HMRC launched in investigation into the global sports betting and gambling company, whose subsidiaries include Ladbrokes Coral and BetMGM, in 2019. Entain faced allegations relating to bribery offences at their former Turkish unit, sold by a management team in 2017.
Last week, Entain agreed to pay a penalty plus disgorgement of profit totalling £585 million. Additionally, the company will make a charitable donation of £20 million and pay £10 million towards HMRC’s and the CPS’s costs, all of which will be provided in four annual instalments from funds it had set aside to cover expected penalties stemming from the case.
Oil majors Shell and BP were down 0.5% and 0.4%, respectively.
They tracked lower, alongside oil prices. Brent oil was quoted at $72.67 a barrel early in London on Wednesday, down from $73.61 late Tuesday.
Further, Exane cut Shell’s stock to ’neutral’, whilst Goldman cut the price target of both BP and Shell.
In the FTSE 250, Volution jumped 5.0%.
The designer and manufacturer of energy-efficient indoor air quality systems said that revenue in the four months ended November 30 was about £121 million, up 8.0% from a year ago.
Looking ahead, Volution said its ‘strong’ start to the financial year, paired with the tailwind from the three acquisitions completed in the calendar year, has given the board confidence in delivering earnings ahead of the current range of market expectations for the financial year.
On AIM, Impellam jumped 34%.
Impellam said it has reached a £483.2 million takeover with Heather Global.
Heather Global will pay 1,084.4 pence per share, which represents a 67% premium per the closing price of 650p on Tuesday.
Impellam said the terms of the acquisition are ‘fair and reasonable’, and accordingly its directors intend to recommend that shareholders vote in favour of the takeover.
In Asia on Wednesday, the Nikkei 225 index in Tokyo was up 0.3%. In China, the Shanghai Composite closed down 1.2%, while the Hang Seng index in Hong Kong was down 0.9%. The S&P/ASX 200 in Sydney closed up 0.3%.
Gold was quoted at $1,980.77 an ounce, lower against $1,982.30.
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