Investors finished Wednesday cautious in London, with the FTSE 100 mildly down in a mixed day of trading, as US Federal Reserve Chair Jerome Powell’s speech gave away little on the future of US interest rates.
The FTSE 100 index closed down 8.32 points, or 0.1%, at 7,401.72. The FTSE 250 ended up 84.55 points, 0.5%, at 17,846.26, and the AIM All-Share closed up 3.05 points, or 0.4%, at 701.68.
The Cboe UK 100 ended down 0.1% at 739.24, the Cboe UK 250 closed down 0.5% at 15,495.36, and the Cboe Small Companies closed virtually flat at 12,927.74.
Stocks in New York were lower at the London equities close, with the DJIA, the S&P 500, and the Nasdaq Composite all down 0.1%.
All eyes have been on the next set of interest rate decisions from the US and UK.
‘Some Fed officials are starting to push back against the doveish narrative,’ said BBH Currency Strategy.
Last Wednesday, the central bank unanimously agreed to hold the key federal funds rate in a target range between 5.25% to 5.50%, fuelling hopes the central bank may be ready to pivot.
However, US Federal Reserve Governor Michelle Bowman on Tuesday predicted another interest rate hike, despite officials holding rates steady at their latest meeting.
Investors were hoping for some guidance from Fed Chief Jerome Powell on Wednesday, but he gave little away about interest rates. He didn’t comment on the outlook for the US economy, either.
Focus was also on UK monetary policy. Bank of England Governor Andrew Bailey has said he is ‘optimistic’ inflation will come down to normal levels, but warned that the cost of borrowing will stay high for some time.
Speaking at an event in Dublin, the governor reiterated that it is ‘too early’ to talk about cutting interest rates.
AJ Bell’s Russ Mould said that where the bank’s land on their next interest rate decisions ‘could dictate whether we have a Santa rally or a festive sell-off before the end of the year.’
The pound was quoted at $1.2300 at the London equities close Wednesday, down slightly compared to $1.2304 at the close on Tuesday.
The euro stood at $1.0707 at the European equities close Wednesday, up against $1.0688 at the same time on Tuesday. Against the yen, the dollar was trading at JP¥150.83, higher compared to JP¥150.51 late Tuesday.
In the FTSE 100, Marks & Spencers was by far the best performer of the day. It climbed 8.9%, after it reinstated its dividend.
Revenue in the half-year to September 30 increased 11% to £6.13 billion from £5.54 billion a year earlier. Pretax profit jumped 56% to £325.6 million from £208.5 million.
The company’s interim dividend amounted to 1.0 pence per share. It did not pay an interim dividend in the year prior.
The improved interim results suggest the clothing, home and food retailer will enjoy a robust Christmas.
‘Marks & Spencer’s first-half results are so good that management’s biggest challenge now may be to stop analysts getting over-excited and prevent them from upgrading their numbers too much and setting too high a bar of expectations,’ said AJ Bell investment director Russ Mould.
Rolls-Royce increased 3.1%. Morgan Stanley lifted the jet engine maker to ’overweight’ from ’equal weight’.
On the upgrade, Morgan Stanley analyst Ross Law wrote: ‘Why now? We see further upside to FY23 free cash flow following strong engine flying activity through H2, and think the medium-term cash potential of the group is still significantly mispriced despite the shares’ strong run year-to-date.’
Tufan Erginbilgic was installed as Rolls-Royce chief executive at the start of the year. His tenure has offered promise so far and he made waves just days into his stint as CEO after he described the firm as a ‘burning platform’.
In the FTSE 250, ITV shed 6.0%, on sluggish revenue growth.
Total revenue in the nine months to September 30 amounted to £2.98 billion, a rise of just 0.9% from £2.95 billion a year earlier. In the ITV Studios production arm, revenue rose 9.3% on-year to £1.52 billion, though in Media & Entertainment, it fell 6.5% to £1.46 billion. M&E includes ITVX, as well as ITV’s television networks.
On AIM, eEnergy surged 47%.
The net-zero energy services received a ‘strategic investment’ from partner Luceco.
Lighting manufacturer and distributor Luceco will invest £1.8 million in eEnergy.
Versarien plummeted 37%. It said it has raised £454,822 via a placing of 165.4 million new shares at 0.275 pence per share.
The Cheltenham, England-based engineering materials company said it will use the proceeds of the placing for corporate and working capital purposes, as well as to provide bridge finance to extend its cash ahead of the payment it expects to receive from the sale of assets.
In European equities on Wednesday, the CAC 40 in Paris ended up 0.7%, while the DAX 40 in Frankfurt ended up 0.5%.
Brent oil was quoted at $80.05 a barrel at the London equities close Wednesday, down from $82.55 late Tuesday. Gold was quoted at $1,954.55 an ounce at the London equities close Wednesday against $1,963.77 at the close on Tuesday.
In Thursday’s UK corporate calendar, there are third quarter results from Endeavour Mining, as well as half-year results from B&M European Value Retail. There will be trading statements from Taylor Wimpey and Domino’s Pizza.
Still to come on Wednesday are earnings from Airbus and Walt Disney.
The economic calendar for Thursday has CPI and PPI readings from China overnight. There is the US unemployment insurance weekly claims report at 1330 GMT.
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