Bank stocks were up in London and the pound lower, after the US Fed chair warned of chunky interest rate hikes in the year ahead.
The US central bank is prepared to raise interest rates by bigger steps than the quarter-point hike announced last week if needed to contain ‘much too high’ inflation, Federal Reserve Chair Jerome Powell said Monday.
‘Jerome Powell stressed the central bank's resolve to tackle inflationary risks, demonstrating the willingness to, if necessary, accelerate the pace of the ongoing monetary policy tightening,’ commented Ricardo Evangelista, a senior analyst at ActivTrades.
‘This stance contrasts with that of other central banks, with the Bank of Japan's governor saying earlier today that the ongoing level of stimulus remains appropriate, while Christine Lagarde, the president of the ECB, mentioned the impact of the war in Ukraine on the continent's economy, highlighting the fact that the ECB and the FED are at different stages in the tightening cycle.’
The FTSE 100 index was up 42.26 points, or 0.4%, at 7,484.65 early Tuesday. The mid-cap FTSE 250 index was up 84.53 points, or 0.4%, at 21,091.09. The AIM All-Share index was down 1.24 point, or 0.1%, at 1,036.62.
The Cboe UK 100 index was up 0.5% at 744.35. The Cboe 250 was up 0.4% at 18,593.19, and the Cboe Small Companies was up 0.3% at 14,978.34.
In mainland Europe, the CAC 40 stock index in Paris was up 0.6%, while the DAX 40 in Frankfurt was up 0.8%.
The pound was quoted at $1.3150 early Tuesday, down from $1.3192 at the London equities close Monday.
The euro was priced at $1.0993, down from $1.1033. Against the yen, the dollar was trading at JP¥120.43 in London, higher against JP¥119.25.
Blue-chip banks were in demand on the prospect of higher interest rates, with HSBC up 3.2%, Standard Chartered up 2.7%, NatWest up 2.7%, Barclays up 1.6% and Lloyds up 1.3%.
In the FTSE 100, athletic apparel retailer JD Sports Fashion was up 3.8% after sportswear maker Nike, late Monday, reported robust revenue growth in the third quarter.
Revenue in the three months to the end of February rose 5% to $10.87 billion from $10.36 billion year-on-year. Revenue rose 8% on a currency-neutral basis, led by Nike Direct growth of 17%.
Nike shares closed up 5.9% in New York on Monday.
Conversely, Kingfisher was down 1.7%, despite the DIY retailer reporting strong annual results and raising its dividend.
For the financial year that ended January 31, pretax profit was up 33% to £1.01 billion from £756 million the year before, as sales rose 6.8% to £13.18 billion from £12.34 billion.
Kingfisher said that financial 2022 was a year of record revenue, profit and that it was gaining market share in the UK and France. It said its B&Q chain had an ‘outstanding year’, with sales passing £4 billion. It was also a record year of expansion for Screwfix, with 70 new stores opened in the UK and Ireland, and Screwfix France showing promising early progress.
Turning to shareholder returns, Kingfisher raised its annual payout by 50% to 12.40 pence per share from 8.25p paid out the year before.
Kingfisher said first quarter like-for-like sales were down 8.1% from the year before, but up 16% from two years earlier.
In the FTSE 250, Softcat was the best performer, up 8.5%, after the IT services provider reported interim profit growth ahead of expectations and strong cash generation.
For the six months that ended January 31, pretax profit increased to £64.2 million from £57.0 million a year before, on revenue of £770.9 million, up from £577.0 million.
Softcat declared an interim dividend of 7.3p, up 14% from 6.4p the year before.
Elsewhere in London, THG was up 1.0% after the beauty products retailer said founder Matthew Moulding will relinquish his position as executive chair but remain CEO.
THG has appointed Charles Allen as independent non-executive chair, starting immediately. Allen currently is chair of construction firm Balfour Beatty and previously was CEO of ITV and Granada.
In Asia on Tuesday, the Japanese Nikkei 225 index closed up 1.5%. Tokyo reopened after being closed for a holiday on Monday. In China, the Shanghai Composite closed up 0.3%, while the Hang Seng index in Hong Kong gained 3.2%. The S&P/ASX 200 in Sydney closed up 0.9%.
Brent oil was quoted at $115.58 a barrel Tuesday morning, up from $114.84 a barrel late Monday, but easing from a high of $119.48 in early trade.
Gold stood at $1,927.76 an ounce, lower against $1,936.69 late Monday.
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