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London open: Stocks gain ahead of Fed announcement
London stocks rose sharply in early trade on Wednesday, underpinned by strength in the mining and energy sectors, as investors eyed the latest policy announcement from the US Federal Reserve.
At 0855 BST, the FTSE 100 was up 1.2% at 8,377.25.
Ahead of the BoE announcement on Thursday and after the Bank of Japan hiked rates by 15 basis points, all eyes were on the Fed decision due at 1900 BST.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: “The Fed is not expected to make a change to its rates today, but is widely and wildly expected to hint at a September rate cut. Activity on Fed funds futures doesn’t only hint at a 100% chance for a rate cut to happen in September but it also shows that the doves are getting ahead of themselves with the assessment of a nearly 15% chance that the Fed could cut 50bp or more in September – which will obviously not happen unless there is a big crisis or stress on the financial markets.
“Therefore, the stretched Fed pricing is a sign that the Fed cut expectations went too far and that we shall see a correction even though the Fed hints strongly at a September cut today – with the risk of hardly upsetting the market if it does not.”
In UK equity markets, heavily-weighted miners were among the top performers, with Antofagasta, Anglo American and Glencore all up. Rio Tinto was also in focus after it reported a 1.8% jump in first-half profit.
Oil giants BP and Shell gushed higher as oil prices rose amid escalating tensions in the Middle East.
HSBC gained as it said it would start a $3bn share buyback after the Asia-focused bank reported estimate-busting interim profits in its final set of results under chief executive Noel Quinn. Pre-tax profits surged to $8.9bn from $8.8bn a year earlier and smashed analysts’ forecasts of $7.8bn.
Quinn, who has been CEO for five years, will be succeeded by finance chief Georges Elhedery.
The bank announced that financial controller Jon Bingham would take on the chief financial officer role on an interim basis.
Taylor Wimpey was in the black as the housebuilder said profits fell by more than a fifth in the first half as residual build cost inflation and weaker pricing hit margins, but that it now expects full-year completions to be at the top end of guidance after a solid operational performance.
Shaftesbury was also up after interim results, while Just Eat surged after backing its guidance for 2024 as it posted a more than 40% increase in first-half core profit and announced a new €150m share buyback programme.
On the downside, GSK fell despite raising annual forecasts after better-than-expected second-quarter results, driven by a strong performance from its cancer and HIV treatments.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Hsbc Holdings Plc | +3.97% | +26.90 | 703.80 |
| 2 |  |
Anglo American Plc | +3.86% | +88.00 | 2,365.00 |
| 3 |  |
Antofagasta Plc | +3.81% | +73.50 | 2,005.00 |
| 4 |  |
Glencore Plc | +3.32% | +13.85 | 430.45 |
| 5 |  |
Shell Plc | +2.96% | +82.00 | 2,848.50 |
| 6 |  |
Diageo Plc | +2.40% | +58.00 | 2,476.00 |
| 7 |  |
Bhp Group Limited | +2.34% | +49.00 | 2,142.00 |
| 8 |  |
Spirax Group Plc | +2.34% | +205.00 | 8,975.00 |
| 9 |  |
Ashtead Group Plc | +2.18% | +118.00 | 5,538.00 |
| 10 |  |
Bp Plc | +2.09% | +9.45 | 461.10 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Gsk Plc | -1.39% | -21.50 | 1,521.00 |
| 2 |  |
Relx Plc | -0.76% | -28.00 | 3,660.00 |
| 3 |  |
St. James’s Place Plc | -0.72% | -5.00 | 692.00 |
| 4 |  |
Marks And Spencer Group Plc | -0.69% | -2.30 | 329.00 |
| 5 |  |
Smith (ds) Plc | -0.26% | -1.20 | 452.80 |
| 6 |  |
Crh Plc | -0.15% | -10.00 | 6,532.00 |
| 7 |  |
Shell Plc | -0.00% | -0.00 | 1,894.60 |
| 8 |  |
Just Eat Plc | -0.00% | -0.00 | 861.00 |
| 9 |  |
Nmc Health Plc | -0.00% | -0.00 | 938.40 |
| 10 |  |
Sainsbury (j) Plc | +0.00% | +0.00 | 277.60 |
US close: Stocks mixed amid barrage of earnings, data
US stocks were mixed on Tuesday, with the Dow rising but the S&P 500 and Nasdaq firmly in the red, as investors digested a barrage of corporate earnings as the Federal Reserve kicked off its two-day policy meeting.
The Dow finished the session up 0.5% at 40,743.33 as it continues to claw its way back towards its record close of 41,198.08 set on 17 July. Meanwhile, the S&P 500 closed down 0.5% while the Nasdaq slumped 1.3%.
There was also a host of economic data to contend with on Tuesday. The average price of a single-family house rose by 5.7%. year-on-year in May, according to the Federal Housing Finance Agency, marking the slowest increase in ten months.
The Conference Board’s July consumer confidence index came in ahead of expectations at 100.3, beating estimates for a reading of 99.7 but down from last month’s print of 100.4.
Finally, US job openings were little changed at 8.18m in June, according to the Bureau of Labor Statistics, down from an upwardly revised reading of 8.23m in May but ahead of expectations for a print of 8.0m.
Meanwhile, the Federal Reserve Bank started its two-day policy meeting on Tuesday afternoon, with its latest interest rate decision set to be revealed on Wednesday. Economists widely expect the central bank to keep rates unchanged.
Earnings deluge
Earnings were Tuesday’s primary focus, with a host of blue chips reporting, and more due out after the closing bell, such as heavyweights Microsoft, Advanced Micro Devices and Starbucks.
Pfizer gained 2.2% as the pharma giant lifted its full-year profit forecast after second-quarter sales of its Covid vaccine and antiviral treatment came in better than expected.
PayPal surged nearly 9% after reporting a strong set of second-quarter results and hiking its full-year earnings forecast as the California-based payments giant delivered an 8% year-on-year revenue increase to $7.89bn, slightly above consensus estimates of $7.81bn.
Heading the other way was Merck which lost around 10% of its market value despite quarterly earnings coming in ahead of expectations and the company even upgrading its full-year sales outlook. Market chatter pointed to disappointing sales of its Gardasil vaccine due to shipment issues in China.
Procter & Gamble‘s stock took a hit after the American consumer goods giant underwhelmed investors with its quarterly sales figures. P&G’s fourth-quarter earnings came in better than expected, but revenues missed the mark by some $200m, causing shares to tank 5%.
Electric car giant Tesla was in reverse, dropping 3.2% after being forced to update the software of more than 1.8m vehicles in the US after a software issue relating to the bonnet opening latch.
Wednesday newspaper round-up: Workplace sickness, Google-Anthropic, Carpetright
The hidden cost of rising workplace sickness in the UK has increased to more than £100bn a year, largely caused by a loss of productivity amid “staggering” levels of presenteeism, a report warns. Analysis by the Institute for Public Policy Research (IPPR) shows the cost of staff sickness has grown by £30bn a year to £103bn in 2023. The annual bill was £73bn in 2018, its study found. – Guardian
The Competition and Markets Authority has begun a preliminary investigation into a partnership between Google and the AI startup Anthropic, marking the latest in a string of investigations into deals between big tech companies and smallerAI ones. Google invested $2bn (about £1.56bn) into Anthropic in 2023, shortly after signing a cloud computing agreement with the startup, which develops the Claude LLM and chatbot. – Guardian
Rachel Reeves’ decision to end winter fuel payments gave Britons a taste of who the Chancellor is likely to hit with higher taxes in her maiden Budget. Reeves insists it won’t be workers. “We will not balance the books on the backs of hardworking people,” she said on July 29 as she warned of a £22bn hole in the public finances. – Telegraph
Carpetright collapsed owing an estimated £213 million to customers, suppliers and landlords, who are to be left almost entirely out of pocket. Hundreds of unsecured creditors — including Royal Mail and Microsoft — are expected to recover less than 1p in the pound of their debts, according to administrators’ proposals seen by The Times. The carpet suppliers Betap and Condor were owed £1.9 million and £1.1 million respectively when Britain’s biggest flooring chain collapsed last week. Microsoft was owed £3.1 million; Biffa, the waste management company, £852,000; Royal Mail, £372,000; and DHL, the logistics company, £540,000. – The Times
Ten listed company directors, deal advisers and senior lawyers have been branded dishonest and deceitful in a stock market scandal kept under wraps for 12 years but disclosed for the first time on Tuesday. The Takeover Panel revealed the scam and named the culprits, who include Richard Balfour-Lynn, a well-known former figure in the property and hotels world, and Julian Treger, the notorious activist investor from the early 2000s. – The Times
