Stock prices in London saw limited early-morning gains on Tuesday, as markets were cautious ahead of a busy week of global interest rate decisions, starting with the US Federal Reserve on Wednesday.
However, hopes of more economic policy support from the Chinese government helped the FTSE 100 inch up when markets opened on Tuesday.
The FTSE 100 index opened up 4.02 points, or 0.1%, at 7,682.61. The FTSE 250 was down 48.05 points, or 0.3%, at 19,097.99, and the AIM All-Share was up just 0.34 of a point at 763.94.
The Cboe UK 100 was flat at 766.33, the Cboe UK 250 was down 0.3% at 16,753.05, and the Cboe Small Companies was down 0.1% at 13,416.49.
Chinese leaders on Monday pledged fresh measures to boost the nation’s stuttering economy, building on optimism that central banks were nearing the end of their rate-hiking cycle.
With data in recent months showing growth stuttering and business activity slowing, Beijing has come under pressure to provide much-needed support, particularly for the vast property sector.
After a meeting, the 24-person Politburo recognised ‘the current economic operation is facing new difficulties and challenges’ and agreed they must ‘implement precise and effective macroeconomic regulation, strengthen countercyclical regulation and policy reserves’.
Chris Turner at ING said that though none of these measures seem to be a ‘game-changer’ so far, the market optimists are hoping that this new directive will be turned into ‘powerful stimulus’ at the State Council level.
In China on Tuesday, the Shanghai Composite closed up 2.1%, while the Hang Seng index in Hong Kong finished 4.2% higher.
Meanwhile, in Tokyo, the Nikkei 225 index closed down 0.1%. The S&P/ASX 200 in Sydney closed up 0.5%.
In London, stocks exposed to the Chinese economy were among the top blue-chip performers in early morning trade, boosted as the country looks to revive a flagging post-Covid recovery.
Anglo American was up 3.6%, Antofagasta up 2.8%, Rio Tinto up 3.6%, and Glencore up 1.6%. Prudential added 1.8%.
Unilever was the best-performing stock in the FTSE 100, however, up 5.0% on Tuesday morning.
The consumer goods firm reported a double-digit percentage rise in interim profit and a small rise in turnover in the first half of 2023.
Unilever reported a pretax profit of €5.27 billion, up 21% from €4.36 billion the year prior. Turnover climbed 2.7% to €30.43 billion from €29.62 billion. Meanwhile, underlying sales grew 9.1% year-on-year.
Consequently, Unilever said it now expects underlying sales growth for the full year to be above 5%, ahead of its multi-year range.
In the FTSE 250, Games Workshop lost 1.4% despite saying it had delivered its ‘highest level’ of annual sales since the company floated nearly 30 years ago.
In the year ended May 28, the games manufacturer reported a pretax profit of £170.6 million, up from £156.5 million the year prior. Revenue totalled £470.8 million, up from £414.8 million the year prior. ‘
We finished the year having delivered eight consecutive years of group sales and profit growth - in the period we reported the highest level of sales and the most profit we have generated since flotation 29 years ago,’ said Chief Executive Kevin Rountree.
Elsewhere in London, Reach surged 16% despite reporting falls in both interim profit and revenue as it affirmed that it remains on track to meet expectations for the full year.
In the six months ended June 25, the newspaper, magazine and digital publisher reported a pretax profit of £6.7 million, down sharply from £32.0 million the year prior. Revenue dipped to £279.4 million from £297.4 million.
‘The ongoing resilience and predictability of print underpins continued investment in a strong digital offering, with circulation revenue growing and newsprint costs starting to decline. Cash generation is supported by a focus on driving efficiencies, with cost reductions on plan and expected to support a stronger second half performance. We expect full year profits for 2023 to be in line with the current market consensus,’ said Chief Executive Jim Mullen.
In the US on Monday, Wall Street ended higher. The Dow Jones Industrial Average closed up 0.5%, the S&P 500 up 0.4%, and the Nasdaq Composite up 0.2%.
The US Federal Reserve is set to start its two-day policy meeting later today. The central bank is expected to lift interest rates by 25 basis points, according to the CME FedWatch Tool.
‘But what Fed officials will also do is to remind investors that the tightening cycle is probably not over and that there will probably be another rate hike on the US’ horizon. So yes, there is a great chance that the Fed will spoil your mood if you are among those thinking that this week’s rate hike will be the last for this tightening cycle in the US,’ said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
The dollar was largely weaker on Tuesday morning as nerves built ahead of Wednesday’s interest rate decision.
The pound was quoted at $1.2863 at early on Tuesday in London, up from $1.2816 at the close on Monday. The euro stood at $1.1084, up from $1.1073. Against the yen, the dollar was trading at JP¥141.32, higher compared to JP¥141.27.
In European equities on Tuesday, the CAC 40 in Paris and the DAX 40 in Frankfurt were both down 0.1%.
Brent oil was quoted at $82.42 a barrel early in London on Tuesday, up from $82.23 late Monday. Gold was quoted at $1,961.19 an ounce, higher against $1,958.30.
Still to come on Tuesday’s economic calendar, there is a US consumer confidence reading at 1500 BST.
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