It was a muted open for stocks in London on Wednesday, with market focus on the upcoming interest rate decision from the US.
In the FTSE 100 index, Rolls-Royce jumped after it upped its full-year guidance.
The FTSE 100 index opened down 6.83 points, 0.1%, at 7,684.97. The FTSE 250 was up 3.54 points at 19,153.42, and the AIM All-Share was up 0.06 of a points at 766.06.
The Cboe UK 100 was down 0.1% at 766.57, the Cboe UK 250 was up 0.1% at 16,823.73, and the Cboe Small Companies was up 0.1% at 13,695.52.
A 25 basis point hike by the Federal Reserve on Wednesday is seen as a foregone conclusion, though analysts are divided over whether it will be ‘one and done’ or more rate lifts ahead for the US central bank.
The decision will be announced at 1900 BST, and a press conference with Chair Jerome Powell will follow shortly after.
According to the CME FedWatch Tool, there is a 99% chance the central bank lifts rates by 25 basis points. It would take the federal funds rate range to 5.25% to 5.50%. The Fed decided against a hike last month, ending a streak of 10 successive rate rises.
The dollar was slightly weaker in early exchanges in Europe.
The pound was quoted at $1.2890 early on Wednesday in London, higher compared to $1.2853 at the equities close on Tuesday. The euro stood at $1.1066, up against $1.1044. Against the yen, the dollar was trading at JP¥140.67, lower compared to JP¥141.03.
In the US on Tuesday, Wall Street ended higher, ahead of the interest rate decision. The Dow Jones Industrial Average up 0.1%, the S&P 500 up 0.3% and the Nasdaq Composite up 0.2%.
Google parent company Alphabet rose 6.1% in after-hours trade in New York. The company net income in the June quarter grew 15% to $18.37 billion from $16.00 billion a year prior. Revenue climbed to $74.60 billion from $69.69 billion.
In the FTSE 100, Rolls-Royce surged 24%, after it said that its financial results for the first half of the year are expected to be materially above consensus expectations.
The London-based jet engine manufacturer expects higher underlying operating profit of £660 million to £680 million, versus consensus of £328 million, as well as free cash flow of GP340 million to £360 million, versus consensus of £50 million. Rolls-Royce explained that this reflects continued end-market growth and its focus on commercial optimisation and cost efficiencies across the company.
Looking ahead, it upped its full-year expectations. It now expects underlying operating profit of £1.2 billion to £1.4 billion, versus consensus of £934 million, and free cash flow of £900 million to £1.0 billion, versus consensus of £732 million, in 2023.
British American Tobacco was up 3.5%.
The London-based maker of cigarettes and vaping products saw its pretax profit rise sharply by 73% to £5.30 billion for the six months that ended June 30 from £3.06 billion a year before.
Revenue though was up just 3.7% to £13.34 billion from £12.87 billion, driven by New Categories, which made ‘good progress’ towards the £5 billion target by 2025.
‘Having been in my new role for 10 weeks, I’m pleased with the resilient performance of BAT in the first half of 2023 and the renewed sense of energy across the organisation,’ said BAT Chief Executive Tadeu Marrocos, who stepped into the CEO role in May.
Looking ahead, BAT kept its full-year guidance unchanged.
NatWest lost 3.4%.
On Tuesday evening, NatWest boss Alison Rose has resigned from her position after admitting to being the source of an inaccurate story about Nigel Farage’s finances.
In a statement released early on Wednesday morning, NatWest Group chair Howard Davies said: ‘The board and Alison Rose have agreed, by mutual consent, that she will step down as CEO of the NatWest Group. It is a sad moment.’
NatWest’s board of directors announced Paul Thwaite, the current chief executive of the company’s commercial and institutional business, will take over Dame Alison’s responsibilities for an initial period of 12 months, pending regulatory approval. The board said in a statement that a further process to appoint a permanent successor will take place ‘in due course’.
Earlier, Rose said she made a ‘serious error of judgment’ when she discussed Farage’s relationship with private bank Coutts, owned by NatWest Group, with a BBC journalist.
In the FTSE 250, Aston Martin jumped 5.5%.
The Gaydon, England-based luxury car manufacturer said first-half revenue rose to £677.4 million from £541.7 million.
Its pretax loss in the first half of 2023 narrowed to £142.2 million from £285.4 million a year earlier. It noted that this included lower year-on-year net financing charges due to a positive non-cash FX revaluation impact of US dollar-denominated debt.
Looking ahead, Aston Martin said it is on track for £2 billion revenue and £500 million adjusted Ebitda by 2024/25.
Meanwhile, Just Eat Takeaway.com was up 7.8%.
The Amsterdam-based food delivery ordering platform said its pretax loss in the six months that ended June 30 narrowed to €317 million from €3.54 billion a year before, despite revenue slipping by 6.9% to €2.59 billion from €2.78 billion, as Just Eat Takeaway cut costs across the board.
Additionally, Chief Financial Officer Brent Wissink has resigned and will depart upon the annual general meeting in May 2024 ‘to pursue other opportunities’, having joined the company in 2011. Just Eat said it will start the search for a successor.
‘There are always many fathers of success in stories such as ours, but there are only few that actually deserve that title,’ commented Chief Executive Officer Jitse Groen.
‘Brent is a clear father of the success of JET, and I am confident that we would have not made it this far without him.’
In Asia on Wednesday, the Nikkei 225 index in Tokyo closed down marginally. In China, the Shanghai Composite closed down 0.3%, while the Hang Seng index in Hong Kong was down 0.3%. The S&P/ASX 200 in Sydney closed up 0.9%.
Australian consumer price inflation cooled by more than expected in the second quarter, according to data from the Bureau of Statistics.
In the three months to June, consumer prices rose 6.0% from the prior year, cooling from 7.0% rise in the March quarter. Compared to the previous quarter, prices were 0.8% higher in the second quarter, compared to a 1.4% rise in the first quarter.
The figures were lower than FXStreet-cited market consensus, which had expected an annual reading of 6.2% and a quarterly rise of 1.0%.
In European equities on Wednesday, the CAC 40 in Paris was down 1.0%, while the DAX 40 in Frankfurt was down 0.3%.
Brent oil was quoted at $83.11 a barrel early in London on Wednesday, up from $82.73 late Tuesday. Gold was quoted at $1,968.98 an ounce, higher against $1,962.17.
Wednesday’s economic calendar is an otherwise light one with the exception of the Fed decision at 1900 BST. There is a US new homes sales reading at 1500 BST.
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