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London open: Stocks rise as Powell comments soothe nerves
London stocks rose in early trade on Wednesday as investors welcomed less hawkish comments from US Federal Reserve chair Jerome Powell.
At 0850 GMT, the FTSE 100 was up 0.7% at 7,542.01.
Marc Kimsey, equity trader at Frederick & Oliver, said: “We’re seeing strong demand for UK-listed oil and base metal stocks this morning after comments from Fed Chair, Jerome Powell, and cooler-than-expected Chinese inflation data, calmed interest rate concerns.”
Looking ahead to the rest of the day, investors will be eyeing the latest US inflation figures at 1330 GMT. CMC Markets analyst Michael Hewson said: “With a March rate hike now almost a done deal, today’s US CPI is likely to be a key signpost in the wider discussion, on how many more hikes are coming down the pipe, as central banks wrestle with a dilemma of rising price pressures, the risks of an economic slowdown caused by tighter restrictions, and a decline in consumer confidence.
“In November US CPI hit a 39 year high of 6.8%, a trend which looks set to continue with today’s December number, given that PPI is already close to 10%.
“PPI, which is due tomorrow, has tended to be a leading indicator for CPI over the last 12 months, and while we did see a pause in headline CPI through the summer months, stabilising at 5.4%, we’ve seen a sharp acceleration since October.
“The various restrictions that were imposed through much of Q4 have shown no signs of slowing when it comes to supply chain disruptions, along with sharp increases in energy prices.”
In UK equity markets, miners were the standout gainers as metals prices rose, with BHP, Antofagasta, Rio, Glencore and Anglo American all higher.
Sainsbury’s was in the black after the supermarket group raised full-year profit forecasts despite a fall in underlying sales over Christmas.
Premier Inn owner Whitbread rallied as it hailed a resilient third-quarter performance in the UK despite the emergence of the Omicron variant, but said trading in pubs and restaurants remained more challenging.
Dunelm rallied as the homewares retailer upped annual profit guidance after a record performance in the 13 weeks to Christmas, driven by online sales and higher margins.
Savills pushed higher after saying its full-year performance was “very significantly” ahead of expectations following an “extraordinarily strong” final trading period since its last update in November.
Grafton gained as the building materials distributor and DIY retailer upgraded its full-year operating profit expectations after a positive end to the year.
On the downside, JD Sports fell even as it lifted annual profits guidance after revenues rose 10% in the 22 weeks to January 1 and US fiscal stimulus boosted trading.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Bhp Group Plc | +3.43% | +78.00 | 2,351.50 |
| 2 |  |
Anglo American Plc | +2.82% | +91.50 | 3,330.50 |
| 3 |  |
Antofagasta Plc | +2.79% | +37.50 | 1,379.50 |
| 4 |  |
Glencore Plc | +2.40% | +9.30 | 397.10 |
| 5 |  |
Bp Plc | +2.30% | +8.50 | 378.10 |
| 6 |  |
Rio Tinto Plc | +2.21% | +117.00 | 5,418.00 |
| 7 |  |
Evraz Plc | +2.04% | +12.20 | 609.80 |
| 8 |  |
Royal Dutch Shell Plc | +1.88% | +33.00 | 1,792.60 |
| 9 |  |
Royal Dutch Shell Plc | +1.82% | +32.00 | 1,790.40 |
| 10 |  |
Sainsbury (j) Plc | +1.68% | +4.70 | 284.00 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Taylor Wimpey Plc | -2.27% | -3.85 | 166.10 |
| 2 |  |
Barratt Developments Plc | -1.86% | -13.20 | 695.80 |
| 3 |  |
Croda International Plc | -0.87% | -78.00 | 8,864.00 |
| 4 |  |
Intertek Group Plc | -0.87% | -48.00 | 5,484.00 |
| 5 |  |
Johnson Matthey Plc | -0.78% | -16.00 | 2,025.00 |
| 6 |  |
Legal & General Group Plc | -0.78% | -2.40 | 305.20 |
| 7 |  |
Centrica Plc | -0.78% | -0.58 | 73.86 |
| 8 |  |
British Land Company Plc | -0.77% | -4.20 | 540.80 |
| 9 |  |
Bt Group Plc | -0.76% | -1.35 | 175.80 |
| 10 |  |
Severn Trent Plc | -0.70% | -20.00 | 2,830.00 |
Europe open: Shares up on Powell comments
European shares rose at the open on Wednesday on the back of gains on Wall Street as investors were cheered by US Federal Reserve Chair Jerome Powell’s more moderate comments in his Congressional hearing testimony.
The pan-European STOXX 600 index was up 0.16% in early deals as Powell said the US economy was ready for the start of tighter monetary policy but it may take several months to make a decision on winding down the central bank’s balance sheet.
Investors now switch their attention to US inflation figures later today, which is expected to come in higher again, on soaring demand, supply chain constraints and labour shortages.
“With a March rate hike now almost a done deal, today’s US CPI is likely to be a key signpost in the wider discussion, on how many more hikes are coming down the pipe, as central banks wrestle with a dilemma of rising price pressures, the risks of an economic slowdown caused by tighter restrictions, and a decline in consumer confidence,” said CMC Markets analyst Michael Hewson.
“In November US CPI hit a 39 year high of 6.8%, a trend which looks set to continue with today’s December number, given that PPI is already close to 10%.
“PPI, which is due tomorrow, has tended to be a leading indicator for CPI over the last 12 months, and while we did see a pause in headline CPI through the summer months, stabilising at 5.4%, we’ve seen a sharp acceleration since October.
In other European economic news, German wholesale price inflation slipped back to 16.1% in December, a 10-month low after hitting a record high 16.6% in November.
In equity news, Dutch firm Philips plunged 10% after saying it expects fourth-quarter core profit to drop around 40%, hit by a global shortage of parts and a recall of ventilators.
Teamviewer shares soared 14% to the top of the Stoxx after the company reported a 20% rise in fourth-quarter billings.
French cloud computing company OVHcloud climbed 4.2% following a 13.9% rise in first-quarter revenue and said it was on track to achieve its full-year objectives.
Grafton gained as the UK and Irish building materials distributor and DIY retailer upgraded its full-year operating profit expectations after a positive end to the year.
On the downside, JD Sports fell even as it lifted annual profits guidance after revenues rose 10% in the 22 weeks to January 1 and US fiscal stimulus boosted trading.
US close: Stocks end session in the green following Powell testimony
Wall Street stocks closed higher on Tuesday as market participants digested testimony from Federal Reserve chairman Jerome Powell on Capitol Hill.
At the close, the Dow Jones Industrial Average was up 0.51% at 36,252.02, while the S&P 500 was 0.92% firmer at 4,713.07 and the Nasdaq Composite saw out the session 1.41% stronger at 15,153.45.
The Dow closed 183.15 points higher on Tuesday, reversing losses recorded in the previous session.
Tuesday’s primary focus was Federal Reserve chairman Jerome Powell’s confirmation hearing on Capitol Hill, where he told the Senate Banking Committee that the post-pandemic economy was likely to be “different in some respects”.
“The pursuit of our goals will need to take these differences into account. To that end, monetary policy must take a broad and forward-looking view, keeping pace with an ever-evolving economy,” said Powell.
Also from the central bank, Kansas City Fed president Esther George said the central bank should soon begin to reduce holdings of US Treasury bonds and mortgage-backed securities accumulated during the Covid-19 pandemic.
“My own preference would be to opt for running down the balance sheet earlier rather than later as we plot a path for removing monetary accommodation,” said George.
On the macro front, the National Federation of Independent Business‘ small business optimism index rose modestly in December, increasing 0.5 points to 98.9 despite growing concerns about inflation and worker shortages.
No major corporate earnings were released on Tuesday.
Wednesday newspaper round-up: Inflation, smart motorways, Unilever
UK households have suffered the sharpest fall in the amount of cash they have available to spend for almost eight years, amid a worsening cost of living crisis driven by high inflation and rising energy bills. According to a report by the insurer Scottish Widows, increasing living costs at the end of last year hit people’s pockets and led to the steepest decline in cash availability since the start of 2014. – Guardian
The rollout of smart motorways has been suspended by the government until at least 2025 in response to safety concerns from MPs and motoring groups. Schemes to convert stretches of the M3, M25, M62 and M40 will be put on ice until five years’ worth of safety data from the controversial roads are available, ministers said. – Guardian
One of Britain’s best known investors has attacked Unilever for its “ludicrous” focus on sustainability, in a sign of growing City frustration at blue chip companies championing fashionable causes. Terry Smith, manager of the £29bn Fundsmith Equity fund, said that the consumer goods behemoth has become “obsessed” with its public image and mocked its efforts to imbue brands such as Hellman’s mayonnaise with a higher purpose. – Telegraph
Hedge fund chief Alan Howard earned over £55m after his business profited from a series of bets during the first year of the pandemic. Company filings show that Brevan Howard Asset Management’s 17 partners received £43.4m in remuneration and shared £79m in profits for the year to March, up from an £18.3m profit split between members a year earlier. – Telegraph
The former KPMG partner responsible for auditing Carillion, who is accused of creating false documents to mislead inspectors, has claimed he was “let down” by junior colleagues and was shopping with his wife on the afternoon of a key meeting, a disciplinary tribunal heard. Peter Meehan, 60, is defending allegations by the Financial Reporting Council that he, with former members of his KPMG audit team, conspired to create false documents and pass them off as contemporaneous audit records during an inspection of their work. – The Times
