The dollar was sharply lower early Thursday, while stock markets were higher, after another aggressive US interest rate hike was followed by commentary from the Federal Reserve chair that was interpreted as dovish.
Meanwhile, earnings season continued apace, with Facebook-owner Meta Platforms disappointing, while Shell unveiled a bumper share buyback.
The FTSE 100 was up 23.82 points, or 0.3%, at 7,372.05. The FTSE 250 index was up 150.64 points, or 0.8%, at 19,788.78. The AIM All-Share index was up 3.97 points, or 0.4%, at 906.85.
The Cboe UK 100 index was up 1.5% at 735.47. The Cboe 250 was up 0.6% at 17,202.12. The Cboe Small Companies was up 0.3% at 13,705.61.
In Paris, the CAC 40 stock index was up 0.4%, while in Frankfurt, the DAX 40 was 0.9% higher.
In the FTSE 100, Ashtead was the best performer, up 3.5%, after the equipment rental firm's US rival United Rentals reported record second-quarter results after the New York close on Wednesday.
The world's largest equipment rentals firm posted second-quarter net income of $493 million, or $6.90 per diluted share, up from $293 million, or $4.02 per share, last year.
The Stanford, Connecticut-based firm also raised its annual revenue outlook to $11.4 billion to $11.7 billion from $11.1 billion to $11.5 billion.
United Rentals shares rose 5.1% in after-hours trade in New York.
Schroders was up 3.2% after the fund manager reported interim results that ‘weathered difficult market conditions’.
For the six months to June 30, revenue inched up to £1.43 billion from £1.42 billion, but pretax profit fell to £312.8 million from €373.9 million.
Assets under management ended the period at £773.4 billion, up from £766.7 billion on December 31, despite sharp falls in equity and bond markets.
The London-based firm maintained its interim dividend at 37 pence per share.
Shell was up 1.9% after the oil major's earnings surged on the back of higher oil prices following Russia's invasion of Ukraine.
For the six months to June 30, adjusted earnings before interest, tax, depreciation and amortisation was $42.18 billion, up 67% from $25.20 billion last year. Income attributable to shareholders almost tripled to $25.15 billion from $9.09 billion.
Tuning to returns, the oil major declared an interim dividend of $0.50, up 21% from $0.41 last year.
In addition, Shell launched a share buyback programme of $6 billion, which is expected to be completed by the third quarter of this year.
At the other end of the large-caps, Smith & Nephew was the worst performer, down 9.1%, after the medical devices maker reported a drop in first-half profit and lowered annual guidance.
For the six months to June 30, revenue was flat at $2.60 billion from the same time last year and pretax profit fell to $204 million from $223 million.
Looking ahead, Smith & Nephew kept its 2022 underlying revenue growth guidance of 4.0% to 5.0% unchanged. However, its trading profit margin is now expected to be around 17.5%, down from the 18.5% previously guided. Its trading profit margin in 2021 was 18.0%.
The London-based firm said the downgrade reflects the ‘prolonged impact of the inflationary environment and continued external supply challenges’.
Barclays was down 2.5% after the lender reported a drop in first-half profit as the bank took a credit impairment charge, but also launched a share buyback.
For the six months to June 30, total income was £13.2 billion, up 17% from £11.3 billion last year, but pretax profit was £3.73 billion, down 24% from £4.90 billion.
Barclays took litigation and conduct charges of £1.9 billion for the first half of the year, including a previously disclosed £1.3 billion cost related to the ‘over-issuance of securities’ in the US.
Barclays declared a half-year dividend of 2.25p per share and said it intends to initiate a further share buyback worth up to £500 million.
In the FTSE 250, CMC Markets was the worst performer, down 17%, after the contract-for-difference provider said operating costs were set to be higher than initially expected.
CMC now expects operating costs to be 5% above guidance provided at the 2022 results last month.
CMC attributed the rise in operating costs to a combination of higher personnel and non-personnel costs, including higher professional fees and software costs associated with expansion projects.
New York ended sharply higher on Wednesday, with the Dow Jones Industrial Average up 1.4%, S&P 500 up 2.6% and Nasdaq Composite up 4.1%.
The US federal funds rate was lifted by 75 basis points to a 2.25% and 2.50% range, as widely expected. It had lifted rates by the same increment in June - the first hike of that magnitude since November 1994.
The US central bank also will continue reducing its holdings of treasury securities and agency debt and agency mortgage-backed securities.
All monetary policy board members voted in favour of Wednesday's three-quarter percentage point hike.
Fed Chair Jerome Powell on Wednesday said a period of slower growth may be needed for a US economy characterised by a tight labour market, though he played down recessionary fears.
In addition, he cautioned that a period of detailed forward guidance could come to an end, as the central bank now eyes a ‘meeting-by-meeting’ approach to monetary policy decisions. Powell said Wednesday's rate hike was of the correct magnitude, though the Fed would not hesitate to implement a stronger increase if needed. However, Powell also said going forward, the pace of rate hikes could slow.
‘As the stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation,’ Powell explained.
Commented Davy Research: ‘Rate expectations were pared back slightly [following Powell's remarks], with Fed fund futures now implying 3.33% by end-2022 - consistent with a 50 basis point rise in September and a 25 bps rise at both the November and December meetings.’
After the New York close, Meta Platforms cautioned on weak ‘advertising demand’ driven by economic uncertainty, as its second quarter revenue and profit fell short of market expectations. Revenue of $28.82 billion in the three months to June 30 was 0.9% lower than $29.08 billion a year earlier. Pretax profit tumbled 35% to $8.19 billion from $12.51 billion a year prior.
The stock fell 4.9% in after-hours trade. Meta is down 55% in the past 12 months.
In Asia on Thursday, Nikkei 225 index in Tokyo closed up 0.4%. In China, the Shanghai Composite closed up 0.2%, while the Hang Seng index in Hong Kong was down 0.2%. The S&P/ASX 200 in Sydney ended up 1.0%.
The dollar was lower across the board in the wake of the Fed decision. The pound was quoted at $1.2170 early Thursday, up from $1.2045 at the London equities close Wednesday.
The euro was priced at $1.0210, up from $1.0133. Against the yen, the dollar was trading at JP¥135.55, well down from JP¥137.17.
Brent oil was quoted at $107.90 a barrel Thursday morning, up from $106.68 a barrel late Wednesday. Gold stood at $1,743.48 an ounce, higher against $1,718.59.
Thursday's economic calendar has US gross domestic product data at 1330 BST, after an inflation reading from Germany at 1300 BST.
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