Stock prices in London were higher on Tuesday morning amid news that grocery price inflation in the UK had cooled, and following dovish comments from two senior Federal Reserve officials on Monday.
The FTSE 100 index opened up 65.88 points, or 0.9%, at 7,558.09. The FTSE 250 was up 216.55 points, or 1.2%, at 17,788.71, and the AIM All-Share was up 3.69 points, or 0.5%, at 691.52.
The Cboe UK 100 was up 0.9% at 754.73, the Cboe UK 250 was up 1.3% at 15,465.13, and the Cboe Small Companies was up 1.0% at 13,127.38.
The vice-chair of the Federal Reserve said the US central bank needed to ‘proceed carefully’ with forthcoming interest rate decisions.
Officials ‘are in a sensitive period of risk management’, Philip Jefferson said in prepared remarks on Monday, needing to balance the respective risks of not tightening enough and being too restrictive.
His comments aligned with those from Dallas Fed President Lorie Logan, who noted that tighter financial conditions could mean the bank does less in terms of raising its policy rate.
Referring to the rise in bond yields, Logan said: ‘If term premiums rise, they could do some of the work of cooling the economy for us, leaving less need for additional monetary policy tightening to achieve the [Federal Open Market Committee]’s objectives.’
Markets now see an 88% chance of the Fed holding rates steady at its next meeting in November, according to the CME FedWatch Tool. Just one week ago, they saw a 72% chance of this outcome.
Further, at the Fed’s following meeting in December, markets see a 69% chance of rates holding at their current level. A week prior, markets saw just a 53% chance of this possibility.
The hope that interest rates in the world’s largest economy have peaked helped offset market nerves around the flaring tension in the Middle East on Tuesday.
Israel kept up its bombardment of Hamas-controlled Gaza Tuesday after the Palestinian militant group threatened to execute some of the around 150 hostages it abducted in a weekend assault if air strikes continue without warning.
Israel imposed a total siege on the Gaza Strip on Monday, cutting off food, water and electricity supplies, and sparking fears that an already dire humanitarian situation will swiftly deteriorate.
Israel has been left reeling by Hamas’s unprecedented ground, air and sea assault. The death toll rose to more than 900 in Israel, which has retaliated with a withering barrage of strikes on Gaza, raising the death toll there to 687.
In London, online grocer and warehouse technology provider Ocado Group was the top blue-chip performer in early morning trade, up 4.3%.
Fresh data from Kantar on Tuesday showed that the online supermarket saw its sales climb 9.6% year-on-year in the 12 weeks ended October 1 to £544 million.
Kantar also reported that UK grocery price inflation cooled to a seventh-month low of 11% in the four weeks to October 1 as prices of staple foods droppe.
It marks the lowest rate since June last year. In the same period, take-home grocery sales rose 9.1% from the prior year.
‘For the first time since last year, the prices of some staple foods are now dropping and that’s helping to bring down the wider inflation rate. Dairy was one of the categories where costs really shot up last autumn but the average price paid for a 250g pack of butter is now 16 pence less than 12 months ago,’ said Tom Steel, strategic insight director at Kantar.
In the longer 12-week period to October 1, grocery price inflation was 11.7%
In the FTSE 250, Currys added 4.2% after it confirmed that its strategic review into Kotsovolos, its business in Greece and Cyprus, has gained interest from several potential buyers.
The electronics retailer said it is currently evaluating the non-binding offers from these potential buyers.
Elsewhere in London, Greencore surged 15% after it said it expects its adjusted operating profit in the year ended September 29 will be ahead of current market expectations of £70.1 million.
It predicts its full-year adjusted operating profit will be in the range of £74 million to £76 million, thanks to a ‘strong’ second-half in what it described as a ‘difficult seasonal comparative period.’
The convenience food manufacturer also announced its intention to restart its share buyback programme as part of a £50 million return of capital to shareholders announced in May 2022.
YouGov jumped 12% as it posted a surge in annual profit and remained confident about its prospect in its current financial year and beyond.
The research and data analytics firm reported a pretax profit of £44.7 million in the year ended July 31, jumping 77% from £25.3 million the year prior.
Revenue totalled £258.3 million, up 17% from £221.1 million despite a ‘challenging’ macroeconomic backdrop. YouGov also noted that its annual revenue performance was ‘well ahead’ of the wider industry.
‘Demand for YouGov’s products and services remains strong with continued new business momentum, high renewal rates and sticky customer relationships. As a result, we remain confident in the group’s prospects for [financial 2024] and beyond, aiming to maintain the strong sales momentum seen over the past year,’ said Chief Executive Steve Hatch.
In European equities on Tuesday, the CAC 40 in Paris was up 1.2%, while the DAX 40 in Frankfurt was up 1.4%.
In Tokyo on Tuesday, the Nikkei 225 index closed up 2.4%. The S&P/ASX 200 in Sydney closed up 1.0%. In China, the Shanghai Composite closed down 0.7%, while the Hang Seng index in Hong Kong was up 0.9%.
In the US on Monday, Wall Street ended higher with the Dow Jones Industrial Average up 0.6%, the S&P 500 up 0.6% and the Nasdaq Composite up 0.4%.
The pound was quoted at $1.2222 early on Tuesday in London, up from $1.2213 at the London equities close on Monday. The euro stood at $1.0561, higher against $1.0548. Against the yen, the dollar was trading at JP¥149.00, higher compared to JP¥148.59.
Brent oil was quoted at $87.69 a barrel at early in London on Tuesday, down from $87.94 at the London equities close on Monday. Gold was quoted at $1,856.92 an ounce, higher against $1,852.16.
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