Share prices were narrowly mixed in London early Tuesday, with major market movements on hold ahead of scheduled commentary on US monetary policy by the head of the US Federal Reserve.
The FTSE 100 index opened up 6.13 points, 0.1%, at 7,935.92. The FTSE 250 was up 26.63 points, 0.1%, at 20,090.74. The AIM All-Share was down 1.10 points, 0.1%, at 864.21.
The Cboe UK 100 was up 0.1% at 794.18 and the Cboe UK 250 rose 0.2% to 17,614.77, but the Cboe Small Companies fell 0.1% at 14,152.97.
The key focus ahead will be US Fed Chair Jerome Powell’s testimony before Congress, which begins on Tuesday with the House and continues on Wednesday with the Senate.
‘Since the latest Federal Open Market Committee meeting, we saw a blowout non-farm payrolls number, an uptick in inflation figures, lower-than-expected decline in the S&P500 earnings, and overall encouraging economic activity data,’ noted Swissquote Bank’s Ipek Ozkardeskaya.
Powell’s comments come two weeks before the US central bank’s next policy decision. The next FOMC meeting is on March 21 and 22.
‘After the Fed slowed the pace of tightening at the 31 Jan-1 Feb to 25bps and hinted that the end of the tightening cycle might have been approaching, the US dataflow has significantly strengthened, with a string of upside surprises in terms of both economic activity and prices,’ said Daiwa Capital Markets.
‘And so, we would expect a relatively hawkish tone from Powell‘??s comments, reiterating that the Fed would respond to strong data if required. But he might also reiterate that the lagged impact of past tightening this cycle should be monitored, in a bid to perhaps temper expectations that the Fed will again increase the magnitude of rate hikes to 50 basis points.’
At the Fed’s last meeting, on January 31 and February 1, it slowed the pace of rate hikes to 25 basis points.
The dollar was slightly weaker in early exchanges in London, ahead of Powell’s testimony.
Sterling was quoted at $1.2040 early Tuesday, higher than $1.2031 at the London equities close on Monday. The euro was unchanged at $1.0678. Against the yen, the dollar bought JP¥135.63, lower versus JP¥135.98.
Wall Street ended mixed on Monday, with the Dow Jones Industrial Average up 0.1% and the S&P 500 up 0.1% but the Nasdaq Composite down 0.1%.
In European equities on Tuesday, the CAC 40 in Paris was down 0.1%, while the DAX 40 in Frankfurt was marginally higher.
Growth in new German factory orders slowed at the beginning of the year. According to Destatis, new manufacturing orders climbed 1.0% month-on-month in January, having risen 3.4% in December. The reading was better than the FXStreet-cited market consensus of a 1.0% decline
In Asian equities on Tuesday, the Nikkei 225 index closed up 0.3% in Tokyo. In China, the Shanghai Composite fell 1.1%, while the Hang Seng index in Hong Kong was shed 0.4%.
The S&P/ASX 200 in Sydney closed up 0.5%, as the Australia’s central bank hiked interest rates by 25 basis points to 3.6%.
The move was widely expected. Reserve Bank of Australia Governor Philip Lowe said he expects further rate increases will be needed to return inflation to the bank’s 2% to 3% target range.
In the UK, house prices rose 1.1% in February from the month before, after a 0.2% rise in January from December. They rose 2.1% annually in February, with the rate of growth unchanged from the previous two months.
‘Recent reductions in mortgage rates, improving consumer confidence, and a continuing resilience in the labour market are arguably helping to stabilise prices following the falls seen in November and December. Still, with the cost of a home down on a quarterly basis, the underlying activity continues to indicate a general downward trend,’ said Kim Kinnaird, director at Halifax Mortgages.
Housebuilder Taylor Wimpey rose 0.8%. Barratt added 0.4%.
Meanwhile, retail sales in the UK held up better than expected in February as consumers proved they are still ready to celebrate events such as Valentine’s Day despite the-cost-of living crisis. Total UK retail sales were up 5.2% in February against an increase of 6.7% for the same month last year.
BRC Chief Executive Helen Dickinson said: ‘While the cost-of-living crisis has made customers increasingly price-sensitive, they are still ready to celebrate special occasions.’
In the FTSE 100, Ashtead Group was up 3.2%.
The industrial equipment rental company said it expects annual results ahead of previous expectations. In its third quarter ending January 31, it said revenue rose 23% to USDD2.43 billion, as pretax profit jumped 29% to $505 million.
For the whole group, Ashtead now expects annual rental revenue growth of 21% to 23%, up from 18% to 21%.
Fresnillo shares fell 1.6%.
The Mexican gold and silver miner said its annual results for 2022 were hit by industry pressures, including volatile precious metal prices and rising cost inflation.
Silver production edged up 1.2% to 53.7 million ounces, but gold production fell 15% to 635,926 ounces - though both were in line with company guidance.
Total revenue fell 10% to $2.43 billion from $2.70 billion, as pretax profit slumped 59% to $248.6 million from $611.5 million. Fresnillo declared a final dividend of 13.3 cents, bringing the annual total to 16.7 cents.
In 2023, it expects attributable silver production expected to be in the range of 57.0 to 64.0 million ounces, including silverstream. Gold production is expected at 590,000 to 640,000 ounces.
It expects global macroeconomic and geopolitical factors to continue to affect its performance, and expects cost inflation to persist.
Gold was quoted at $1,849.67 an ounce early Tuesday, edging down from $1,850.32 on Monday. Brent oil was trading at $86.45 a barrel, up from $85.90.
In the FTSE 250, John Wood Group jumped 15% to 223.47 pence.
The engineering services company said it has received a fourth proposal for a cash takeover offer from Apollo Global Management worth 237 pence per share.
‘The board believes this latest proposal continues to undervalue the group and is therefore minded to reject. The board will continue to engage with its shareholders and intends to engage further, on a limited basis, with Apollo,’ John Wood said.
The company had already rejected three proposals, the most recent in January for 230p, or around £1.59 billion in total.
On AIM, In The Style plunged 78%.
The digital fashion brand said it has completed its strategic review, and has conditionally agreed to sell its only operating subsidiary, In The Style Fashion Ltd, for £1.2 million cash.
The offer for its subsidiary came from Baaj Capital, a UK-based private family office.
The company will now change its name to Itsum PLC, and become a cash shell. The firm also wants to cancel its shares on AIM after the completion of the sale. Shareholders will be able to vote on all this at a general meeting to be called by the company.
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