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London open: Stocks rebound from four-week low
UK stocks edged higher on Wednesday morning as markets rebounded after the previous day’s sell-off, with investors digesting domestic inflation data and hawkish comments from the head of the Federal Reserve.
The FTSE 100, which dropped 1.8% to a four-week low of 7,820.36 on Tuesday, was up 0.12% at 7,830 by 0836 BST, with mining stocks bouncing back after bearing the brunt of selling pressure the day before.
Comments from Federal Reserve chair Jerome Powell the previous evening will likely be weighing on investors’ minds on Wednesday morning, after the head of the US central bank needed more confidence that inflation was on a downward trend before cutting interest rates. “Right now, given the strength of the labour market and progress on inflation so far, it’s appropriate to allow restrictive policy further time to work,” he said.
Back on home soil, data released before the opening bell showed that the annual rate of UK inflation eased less than hoped in March, falling from 3.4% to 3.2%, missing the 3.1% consensus forecast. Following strong wage-growth data reported on Tuesday, the figures will likely prompt caution from the Bank of England as they attempt to keep price pressures in check before cutting rates.
Danni Hewson, head of financial analysis at AJ Bell, said there were a “few troubling issues” in the data release notably the stickiness of service sector inflation. “This print is unlikely to persuade Bank of England policymakers, who just a couple of months ago were voting for further hikes, that the time is now right to start to cut,” Hewson said.
“Looking at the numbers after the inflation print was released, expectation of a June cut has fallen back significantly and more than 50% now think even August will be too soon,” she said.
Later in the session, we’ll see inflation revisions to the eurozone inflation rate for March, along with speeches from a number of board members of the European Central Bank, including chief Christine Lagarde, along with comments from a number of prominent Fed figures.
Miners provide a lift
Mining stocks headlined the FTSE 100 risers list early on, with Rio Tinto and Anglo American among the best performers. Rio Tinto announced on Wednesday that it was holding on to annual production guidance, despite a sharp fall in first-quarter iron ore shipments and production; while Anglo reported an improvement in rough diamond sales in the latest sales cycle at its De Beers division.
Sector peer Antofagasta was also higher after reiterating its full-year output targets even after a 11% drop in copper production in the first quarter.
Struggling online fast-fashion retailer Asos jumped 8% after its first-half results weren’t as bad as feared, and the company said underlying earnings in the 2024-25 financial year are set to be “significantly” higher than the previous two years as it cuts costs and slashes stock levels.
Stocks in defensive sectors such as utilities weakened as investor risk appetite returned, with SSE, Severn Trent and United Utilities among the worst performers on the FTSE 100.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Anglo American Plc | +3.96% | +83.00 | 2,178.00 |
| 2 |  |
Fresnillo Plc | +3.42% | +20.00 | 604.50 |
| 3 |  |
Rio Tinto Plc | +2.95% | +155.00 | 5,409.00 |
| 4 |  |
Bhp Group Limited | +2.49% | +57.00 | 2,344.00 |
| 5 |  |
Glencore Plc | +2.34% | +10.90 | 477.50 |
| 6 |  |
Antofagasta Plc | +2.17% | +48.00 | 2,256.00 |
| 7 |  |
Easyjet Plc | +1.95% | +10.00 | 522.00 |
| 8 |  |
Standard Chartered Plc | +1.95% | +12.40 | 647.60 |
| 9 |  |
Prudential Plc | +1.75% | +12.00 | 699.40 |
| 10 |  |
Burberry Group Plc | +1.63% | +18.50 | 1,153.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Gsk Plc | -1.21% | -19.50 | 1,591.00 |
| 2 |  |
Hargreaves Lansdown Plc | -1.04% | -7.60 | 722.40 |
| 3 |  |
Melrose Industries Plc | -0.82% | -5.20 | 626.40 |
| 4 |  |
Flutter Entertainment Plc | -0.63% | -95.00 | 14,905.00 |
| 5 |  |
Centrica Plc | -0.61% | -0.80 | 130.15 |
| 6 |  |
Bae Systems Plc | -0.61% | -8.00 | 1,313.50 |
| 7 |  |
Kingfisher Plc | -0.57% | -1.40 | 243.00 |
| 8 |  |
Halma Plc | -0.45% | -10.00 | 2,194.00 |
| 9 |  |
Scottish Mortgage Investment Trust Plc | -0.43% | -3.60 | 831.00 |
| 10 |  |
Astrazeneca Plc | -0.42% | -46.00 | 10,832.00 |
US close: Stocks finished mixed after Powell urges patience on rate cuts
US stocks finished mixed on Tuesday after bond yields climbed on the back of comments from Federal Reserve chair Jerome Powell, who said the central bank needed more confidence that inflation was on a downward trend before cutting interest rates.
The Dow snapped a five-day losing streak to finish 0.2% higher at 37,799, bouncing back after finishing at a three-month low the previous session. However, the S&P 500 fell 0.2% to 5,051 and the Nasdaq lost 0.1% to 15,865.
The 10-year US Treasury yield was up 6.4 basis points at 4.672%, its highest level in five months, after Powell said recent economic data – such as three straight months of stronger-than-forecast inflation – “have clearly not given us greater confidence and instead indicate that it is likely to take longer than expected to achieve that confidence”.
In a shift in tone compared with recent comments, the Fed chair pushed back on market expectations for two or three rate cuts in 2024 – projections that were discussed by Fed officials at their latest meeting. “Right now, given the strength of the labour market and progress on inflation so far, it’s appropriate to allow restrictive policy further time to work,” he said.
Also weighing on sentiment were rising tensions in the Middle East after Israel said it had no choice but to respond to Iran’s 300-plus missiles and drones that were launched at the weekend. The initial muted reaction to Tehran’s attack had a similarly subdued impact on the markets on Monday, though fears were rising of a reprisal. “Missiles into the territory of the State of Israel will be met with a response,” said Herzi Halevi, chief of staff of the IDF.
On the macro front, builders broke ground on fewer new homes last month than anticipated. According to the Department of Labor, in seasonally adjusted terms, housing starts dropped at a month-on-month pace of 14.7% in March to reach an annual rate of 1.32m (consensus: 1.48m). Permits, meanwhile, which were considered to be a lead indicator for starts, dropped by 4.3% to 1.45m (consensus: 1.51m).
On another note, the US capacity utilisation rate edged up to 78.4% in March, up from a downwardly revised 78.2% print for February, according to the Federal Reserve, while industrial production flattened year-on-year in March, following a downwardly revised 0.3% drop in February.
Market movers
Shares in banking giant Morgan Stanley rose 2.5% after the company beat forecasts with a 13% increase in first-quarter profits. Net income came in at $3.4bn for the first three months of the year, up from $3.0bn a year earlier, with earnings per share rising to $2.02 from $1.70, ahead of the $1.67 expected by analysts.
Heading the other way was sector peer Bank of America, dropping 3.5% after posting a sharp fall in profits. First-quarter net income at the US lender dropped to $6.7bn from last year’s $8.2bn.
UnitedHealth jumped 5% following the health insurer’s better-than-expected first-quarter revenues, as investors shrugged off a $1.6bn potential hit from the hack of its Change Healthcare division.
Healthcare and pharma titan Johnson & Johnson was down 2% despite the company topping forecasts with its adjusted earnings on the back of surging medical device sales.
Wednesday newspaper round-up: IMF, champagne, Boeing, Plus500, Trump Media
Rising energy prices and disruption to international shipping risk “stalling” declines in inflation in leading economies, the International Monetary Fund has warned, telling central banks that the “last mile” of their battle against price rises may be the hardest. In its latest assessment of global financial stability, the IMF said markets were vulnerable to another round of volatility if investors continued to push back their expectations for interest rate cuts this year, leading to falls in bond and stock prices. – The Times
The owner of Moët & Chandon, Krug and Veuve Clicquot has been left with a post-pandemic hangover after a sharp drop in champagne sales. French luxury goods giant LVMH suffered a 16pc slump in wine and spirit sales to €1.4bn (£1.2bn) during the first quarter of 2024. The company, which also owns Dom Pérignon, on Tuesday said this was driven by “the normalisation of post-Covid demand”. It follows years of record demand for champagne during and immediately after the pandemic. – Telegraph
A whistleblower has urged Boeing to ground every 787 Dreamliner jet worldwide after warning they are at risk of premature failure ahead of a high-profile hearing on Capitol Hill. The planemaker has been grappling with its latest crisis since a cabin panel blowout in January raised fresh questions about the production of its bestselling commercial jet, the 737 Max. – Guardian
A leading seller of contracts-for-difference made about £25 million betting against its own customers during the first three months of the year. Plus500 said that client losses had given it a $30.6 million boost in the first quarter, helping to push adjusted profits at the group in the period up by 2 per cent year-on-year to $102.6 million. Revenue rose 4 percent to $215.6 million. The London-listed, Israel-based Plus500 operates a popular online platform that enables punters to trade contracts-for-difference, which are derivatives that are used to place leveraged bets on the direction of prices in financial markets. – The Times
Donald Trump’s social media empire has announced plans to launch a streaming platform. Its shares continued to fall. Trump Media & Technology Group, owner of Truth Social, has come under pressure since its stunning stock market debut last month left the former president with a vast stake worth about $4.9bn on paper. – Guardian
