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London open: Markets directionless in wake of central bank decisions
UK stocks were struggling for direction in early deals on Friday as investors continued to digest market-moving central bank decisions across the globe.
London’s FTSE 100 was up 0.1% at 7,689, but was swinging between gains and losses in the opening half an hour’s trade.
Richard Hunter, head of markets at Interactive Investor, said “a downbeat mood” is evident across global stock markets at the moment as investors adjust their interest-rate expectations to a “higher-for-longer mantra” in the UK and US.
The Federal Reserve and Bank of England left interest rates unchanged this week, but policymakers from both sides argued that rates are likely to stay elevated for some time yet, and even another rate hike might be possible if incoming economic data suggests it is needed.
In the UK in particular, Hunter said the prospect of a long pause in rates is “putting more pressure on an economy which is only showing tepid growth at the moment”. He said: “The uncertainty has been most keenly felt in the FTSE250 index, which is seen as a natural barometer for the domestic economy, and which has fluctuated between positive and negative territory this year, currently standing down by 1.5%.”
Friday sees the release of a host of purchasing managers’ indices (PMIs) across the Eurozone, UK and US.
Other data revealed that UK retail sales rebounded in August from the rain affected prior month, rising 0.4% on the back of strong food and clothing purchases by consumers. This was an improvement from the 1.1% decline in July but slightly below the 0.5% increase expected by analysts.
Meanwhile, the GfK Consumer Confidence index increased four points to -21, the highest reading since January 2022.
Ocado attempts a rebound
Ocado was among the best performers as it attempted to claw its way back after plummeting 20% yesterday following a broker downgrade by Exane Paribas to ‘underperform’. Prior to this week, the stock had more than doubled since June.
JD Sports Fashion was extending gains after impressing the market with its interim results yesterday, with pre-tax profits jumping by 26%.
AstraZeneca was higher after announcing positive results from the TROPION-Breast01 phase three trial on Friday.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | +5.25% | +34.00 | 681.80 |
| 2 |  |
Bhp Group Limited | +2.64% | +60.00 | 2,337.00 |
| 3 |  |
Lloyds Banking Group Plc | +2.44% | +1.09 | 45.51 |
| 4 |  |
Hargreaves Lansdown Plc | +2.07% | +16.80 | 828.40 |
| 5 |  |
Auto Trader Group Plc | +1.97% | +12.20 | 631.20 |
| 6 |  |
Astrazeneca Plc | +1.97% | +214.00 | 11,100.00 |
| 7 |  |
Anglo American Plc | +1.61% | +36.00 | 2,271.00 |
| 8 |  |
Rightmove Plc | +1.55% | +8.60 | 563.00 |
| 9 |  |
Glencore Plc | +1.39% | +6.30 | 458.35 |
| 10 |  |
Hiscox Ltd | +1.34% | +14.00 | 1,058.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Centrica Plc | -1.68% | -2.90 | 169.55 |
| 2 |  |
Phoenix Group Holdings Plc | -1.64% | -8.80 | 527.20 |
| 3 |  |
Melrose Industries Plc | -1.63% | -7.70 | 463.90 |
| 4 |  |
Crh Plc | -1.41% | -62.00 | 4,324.00 |
| 5 |  |
Tui Ag | -1.34% | -6.60 | 486.60 |
| 6 |  |
Easyjet Plc | -1.31% | -5.70 | 428.40 |
| 7 |  |
Itv Plc | -1.21% | -0.90 | 73.40 |
| 8 |  |
Halma Plc | -1.09% | -22.00 | 2,003.00 |
| 9 |  |
Next Plc | -0.98% | -72.00 | 7,278.00 |
| 10 |  |
Sainsbury (j) Plc | -0.95% | -2.60 | 272.00 |
US close: S&P 500 at three-month low in FOMC aftermath
US stocks dropped on Thursday, with the S&P 500 and Nasdaq both falling to their lowest levels since late-June, as rising bond yields and hawkish comments from the Federal Reserve weighed on sentiment.
The Dow Jones Industrial Average finished down 1.1% at 34,070, the S&P 500 slipped 1.6% to 4,330 while the Nasdaq dropped 1.8% to 13,224. This was the S&P 500’s lowest close since 26 June, and the Nasdaq’s lowest close since 7 June.
Stocks were extending their sell-off on Wednesday after the conclusion of the Federal Open Market Committee meeting. While the Fed left the Federal Funds Rate at the 5.25-5.5% range, the majority of voting members said another hike before the end of the year was probable.
The committee indicated that interest rates would only be lowered to around 5% by the end of 2024, suggesting that they remain committed to a ‘higher-for-longer’ strategy.
Meanwhile, at a press conference following the meeting, chair Jerome Powell said he still needed to see “convincing evidence” that higher interest rates are having the desired effect on inflation before the FOMC can begin to loosen monetary policy.
“No one really expected the pause to be accompanied by such a dramatic shift in the dot plots, but perhaps this time the market will really believe that the Fed is determined to leave rates at their current elevated levels until inflation is well and truly slain,” said Chris Beauchamp, chief market analyst at IG.
Meanwhile, government bonds fell on Thursday after economic data came in ahead of expectations. Initial jobless claims totalled 201,000 in the week to 15 September, down from a revised 221,000 previously and well below the 225,000 forecast.
The yield on a 10-year Treasury was up a further 8 basis points at 4.494%, its highest since 2007. Two-year yields were at their highest since 2006, while the 30-year yield rose to its 2011 high.
FedEx delivers
FedEx impressed the market with its first-quarter results as adjusted earnings rose 32% to $4.55, well ahead of the $3.73 consensus forecast.
Shares in Fox Corp jumped on the news that Rupert Murdoch stepping down as chairman, with his son Lachlan stepping in to head the ship.
Media groups Paramount and Walt Disney were performing well on the news that the Writers Guild of America strike could be nearing an end with studios and writers close to an agreement.
Arm finished in the red again as its fall from grace continues after debuting on the Nasdaq last week. The stock, which floated at $51, touched a high of $69 on the first day of trading, but has since been under heavy selling pressure. The share price actually dipped below the IPO price during Thursday’s session, hitting a low of $49.85.
