Stock prices in London had little direction on Wednesday morning, ahead of crucial interest rate decisions by the US Federal Reserve and the Bank of England.
The FTSE 100 index opened up 2.76 points at 7,669.07. The FTSE 250 was down 11.48 points at 19,338.02, and the AIM All-Share was down 0.19 of a points at 754.70.
The Cboe UK 100 was down 0.1% at 765.96, the Cboe UK 250 was down 0.1% at 16,798.28, and the Cboe Small Companies was down 0.1% at 14,733.78.
In the US on Tuesday, Wall Street ended mixed, as investors looked ahead to Wednesday’s interest rate decision. The Dow Jones Industrial Average was up 0.4%, whilst the S&P 500 was down 0.1% and the Nasdaq Composite was down 0.8%.
On Wednesday, all eyes will be on the latest interest rate decision from the US. The Fed will announce its latest decision at 1900 GMT.
It is expected to leave the federal funds rate range unmoved at 5.25% to 5.50%. What happens next has markets divided, however.
According to the CME FedWatch Tool, there is a 45% chance the central bank cuts rates in the following meeting in March. That probability stood at 73% a month ago.
Focus on Wednesday will be on whether the Fed Chair Jerome Powell offers any clues on the interest rate outlook.
Eyes will then swiftly turn onto the Bank of England, which will announce its latest interest rate decision at 1200 GMT on Thursday. Like the Fed, the BoE is expected to keep rates unchanged.
In early economic news, UK house prices edged higher in January, according to Nationwide.
The Nationwide house price index showed a 0.7% increase in seasonally-adjusted UK house prices in January, after showing no change in December. According to FXStreet, market consensus expected the house price index to edge up 0.1% on-month.
In January, the average UK house price stood at £257,656, up slightly from £257,443 in December, without seasonal adjustment.
Annually, the house price index edged down 0.2%, slowing from a 1.8% decline in December. This came in lower than consensus, with markets pencilling in a 0.9% fell.
‘There have been some encouraging signs for potential buyers recently with mortgage rates continuing to trend down. This follows a shift in view amongst investors around the future path of Bank Rate, with investors becoming more optimistic that the Bank of England will lower rates in the years ahead,’ said Robert Gardner, Nationwide’s chief economist.
On the back of the data, housebuilders were trading higher. Taylor Wimpey jumped 1.0%, Barratt Developments rose 0.4% and Persimmon edged up 0.3%.
Elsewhere in the FTSE 100, GSK fell 0.4% as it announced a lower total dividend for 2023.
GSK reported that turnover in 2023 rose 3.4% to £30.33 billion from £29.32 billion a year earlier.
Notably, GSK reported £1.24 billion in revenue for its respiratory syncytial virus vaccine Arexvy, which received approval in the US, the EU, Japan, the UK and Canada in 2023.
Pretax profit in the year climbed 7.7% to £6.06 billion from £5.63 billion.
On the back of the results, the pharmaceutical company paid out a dividend of 16p, bringing the full year dividend to 58p, which was 5.3% lower than a total payout of 61.25p in 2022.
Looking ahead, GSK said it expects turnover growth between 5% and 7% in 2024. It expects to pay a dividend of 60p per share.
Chief Executive Emma Walmsley said: ‘GSK delivered excellent performance in 2023, with clear highlights being the exceptional launch of Arexvy and continued progress in our pipeline. We are now planning for at least 12 major launches from 2025, with new Vaccines and Specialty Medicines for infectious diseases, HIV, respiratory and oncology.’
In the FTSE 250, Harbour Energy lost 4.5%.
Goldman cut its stock to ’sell’ from ’buy’.
Other FTSE 250 stocks were also hurt by stock broker cuts.
Morgan Advanced lost 2.5% and Victrex fell 1.8%. Both companies saw a rating cut by Jefferies.
Meanwhile, FDM lost 1.9% on the back of a trading update.
The IT-focused professional services provider expects its financial performance to be in line with expectations. Revenue for the year is expected to edge up to £334 million up from £330 million a year earlier.
‘The last nine months of 2023 saw difficult trading conditions across our markets, with many clients delaying and deferring decisions around projects and consultant placements given the macro-economic and geo-political uncertainties they faced. Our agile business model allowed us to take the action required to align our business activity and resources appropriately, a programme which continues into the current year,’ said CEO Rod Flavell.
On AIM, Pebble Beach jumped 30%.
The company said its 2023 trading performance was ahead of market forecasts, with revenue up to £12.4 million from £11.2 million a year earlier.
he revenue generated by Pebble Beach includes recurring revenue of approximately £5.2 million up 13% from £4.6 million.
In Asia on Wednesday, the Nikkei 225 index in Tokyo was up 0.6%. In China, the Shanghai Composite was down 1.5%, while the Hang Seng index in Hong Kong was down 1.4%. The S&P/ASX 200 in Sydney closed up 1.1%.
In European equities on Wednesday, the CAC 40 in Paris was up 0.3%, while the DAX 40 in Frankfurt was up 0.1%.
The pound was quoted at $1.2695 early on Wednesday in London, higher compared to $1.2665 at the equities close on Tuesday. The euro stood at $1.0823, down against $1.0839. Against the yen, the dollar was trading at JP¥147.43, down compared to JP¥147.80.
Brent oil was quoted at $82.14 a barrel early in London on Wednesday, down from $82.32 late Tuesday. Gold was quoted at $2,040.19 an ounce, higher against $2,033.15.
Still to come on Wednesday’s economic calendar, there is German consumer price inflation data.
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