Hot Features
Premium
Register to chat with like-minded investors on our interactive forums.
London open: FTSE falls after hawkish Fed comments
ondon stocks fell in early trade on Wednesday as investors mulled hawkish Fed comments and eyed the latest reading on the UK construction sector.
At 0905 BST, the FTSE 100 was down 0.3% at 7,594.74.
Overnight, Federal Reserve governor Lael Brainard said the US central bank could start reducing its balance sheet as soon as next month and that it was prepared to take stronger action on raising interest rates. These comments were echoed by San Francisco Fed President Mary Daly.
CMC Markets analyst Michael Hewson said: “Yesterday’s comments put into sharp relief the concerns investors have, that in looking to rein back inflation, the Fed might overplay its hand and tighten too aggressively and tip the economy into recession.”
He added that the Fed minutes later in the day should offer some additional insight into the thinking of all Fed policymakers into this part of the Fed’s normalisation process.
“Today’s minutes should give us an indication as to how much events in Ukraine tempered the Fed’s response last month in terms of the size of the increase in rates, and whether there was a temptation to go harder amongst other members and join Bullard in going for more than 25 basis points,” Hewson said.
On the data front, the S&P Global UK construction PMI for March is due at 0930 BST.
In equity markets, tobacco company Imperial Brands rallied after saying it had made “good progress” in delivering on its strategic objectives in the six months ended 31 March, with the group continuing to perform in line with the five-year strategy launched in 2021. The company said it was on track to deliver full-year results in line with revised guidance issued on 15 March.
Educational publisher Pearson was also a high riser after an upgrade to ‘buy’ at Citi, while IWG was boosted by an upgrade to ‘buy’ at Peel Hunt.
On the downside, Royal Mail lost ground after Barclays cut its price target on the overweight-rated stock. It said current uncertainties and active union negotiations are weighing on the shares and cut its FY23 EBIT estimate by 40% to reflect weaker trading for both UK and GLS.
Housebuilder Redrow was also weaker after saying it had signed the UK government’s pledge to make properties safe following the Grenfell Tower fire and that it expects to make an additional provision of £164m as a result.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Imperial Brands Plc | +2.26% | +36.50 | 1,652.50 |
| 2 |  |
Berkeley Group Holdings (the) Plc | +1.24% | +48.00 | 3,913.00 |
| 3 |  |
Informa Plc | +1.12% | +6.80 | 615.80 |
| 4 |  |
Diageo Plc | +0.82% | +32.50 | 4,012.00 |
| 5 |  |
Standard Chartered Plc | +0.72% | +3.60 | 503.20 |
| 6 |  |
Intertek Group Plc | +0.72% | +38.00 | 5,324.00 |
| 7 |  |
Legal & General Group Plc | +0.62% | +1.70 | 274.40 |
| 8 |  |
Spirax-sarco Engineering Plc | +0.58% | +75.00 | 12,905.00 |
| 9 |  |
Shell Plc | +0.54% | +11.50 | 2,132.50 |
| 10 |  |
Relx Plc | +0.53% | +13.00 | 2,458.00 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Tui Ag | -2.35% | -5.70 | 236.40 |
| 2 |  |
Scottish Mortgage Investment Trust Plc | -2.23% | -23.00 | 1,009.00 |
| 3 |  |
Next Plc | -2.05% | -126.00 | 6,028.00 |
| 4 |  |
Sainsbury (j) Plc | -1.95% | -4.80 | 241.80 |
| 5 |  |
Marks And Spencer Group Plc | -1.90% | -3.00 | 155.15 |
| 6 |  |
Smurfit Kappa Group Plc | -1.77% | -59.00 | 3,272.00 |
| 7 |  |
Carnival Plc | -1.75% | -24.50 | 1,372.00 |
| 8 |  |
Rolls-royce Holdings Plc | -1.74% | -1.72 | 96.94 |
| 9 |  |
Burberry Group Plc | -1.73% | -29.00 | 1,646.00 |
| 10 |  |
Associated British Foods Plc | -1.67% | -27.50 | 1,615.50 |
Europe open: Shares slip on Russia sanctions threat, Fed unwinding fears
European stocks were lower at the opening, tracking movements in the US and Asia overnight as investors fretted about the impact of further sanctions on Russia after allegations of civilian killings by its troops in Ukraine.
The pan-European STOXX 600 index fell 0.16% with all major regional bourses lower.
Comments on Tuesday from US Federal Reserve governor Lael Brainard and Mary Daly of the San Francisco Fed expressing worries over inflation ahead of meeting minutes to be released Wednesday, also concerned investors.
Brainard said she expected a rapid rundown of the Fed’s balance sheet combined with raft of interest rate rises this year, which indicated inflationary pressures were weighing more heavily on the central bank.
Germany’s DAX was flat despite data showing industrial orders fell more than expected in February on weaker overseas demand as supply shortages, spiralling energy prices hit manufacturing activity.
In equity news, shares in Danish wind turbine maker Vestas fell after the company said it would withdraw from Russia.
Shares in Imperial Brands rose as the company said it had made “good progress” in its strategic objectives this morning despite a weaker tobacco performance in Europe.
US close: Major indices end session lower
Wall Street stocks ended the session lower on Tuesday as market participants continued to digest a recession warning from the bond market and the latest headlines in the Ukraine-Russia war.
At the close, the Dow Jones Industrial Average was down 0.80% at 34,641.18, while the S&P 500 was 1.26% weaker at 4,525.12 and the Nasdaq Composite saw out the session 2.26% softer at 14,204.17.
The Dow closed 280.70 points lower on Tuesday, reversing gains recorded in the previous session.
Treasury yields were in focus again on Tuesday, with the two-year yield and its 10-year counterpart reversing course after inverting late last week, while traders also had a keen eye on developments in Eastern Europe, with the war between Ukraine and Russia carrying on and Ukraine president Volodymyr Zelenskyy vowing to pursue allegations of war crimes against Moscow, stating that over 300 civilians were killed and tortured in a suburb near the nation’s capital of Kyiv.
Oil prices, which started the session higher, were in the red by the end of trading on Tuesday, with West Texas Intermediate futures down 1.28% at $101.96 per barrel and Brent crude 1.59% lower to $105.82.
In other news, the EU revealed it was planning a mandatory phase-out of coal imports from Russia in response to reports about Russian atrocities in Ukraine, according to Bloomberg. The action would be added to measures already ready for debate by EU ambassadors. Details of the plan were under discussion, according people familiar with the proposals told Bloomberg, but the European commission was also expected to propose a ban on most Russian trucks and ships from entering the EU, the report said. Russia supplies about half of Europe’s thermal coal used for power stations to generate electricity.
Stocks headed south after Federal Reserve governor Lael Brainard said the central bank needed to shrink its balance sheet “rapidly” if it were to drive down inflation.
On the macro front, the US trade deficit remained near-record levels of $89.18bn in February, down only a touch from January’s print of $89.22bn as imports continued to soar amid demand and rising oil prices. Imports were up 1.3% to a record high level of $317.8bn, while exports rebounded and increased 1.8% to also hit a fresh all-time high of $228.6bn.
Elsewhere, the S&P global US composite PMI was revised lower to 57.7 in March from a preliminary reading of 58.5, but was still up from the 55.9 seen in February, the fastest rate of growth since July 2021 and signaling a sharp expansion in business activity across the private sector.
Finally, last month’s ISM non-manufacturing PMI increased to 58.3 in March from 56.5 in February as easing Covid-19 pandemic restrictions somewhat offset rising costs and strained supply chains.
No major corporate earnings were slated for release on Tuesday.
Wednesday newspaper round-up: Twitter, gender pay gap, Channel 4, Uber
Twitter has confirmed it has working on an edit button, but denied the idea came after the company’s new largest shareholder, Elon Musk, held a poll on it. For years, editing a tweet already published has been a sought after feature on the site, to correct typos or embarrassing mistakes. Currently people work around it by deleting and reposting the tweet. – Guardian
Women in the UK were paid just 90p for every £1 earned by a man, according to the latest figures released through the government’s gender pay gap reporting mechanism. Among those high-profile companies reporting particularly large gender gaps was easyJet. According to data filed by the company’s larger arm, Easyjet Airline Company, women’s median wage stood at just 36p for every £1 that men earned last year. – Guardian
ITV is poised to launch a takeover bid for Channel 4 as it attempts to forge a British super-broadcaster capable of competing with the might of Netflix. Britain’s biggest commercial station is understood to have told ministers that it would be interested in making an offer for its state-backed rival, which is to be privatised by 2024 with an estimated price tag of around £1bn. – Telegraph
Uber plans to let users buy train and plane tickets through its app as it looks to move beyond minicabs into an all-encompassing transport hub. Inter-city trains and coaches will be available to book through Uber in the summer, the company said. It plans to let tourists buy plane and Eurostar tickets later in the year. – Telegraph
The Chinese fast-fashion retailer Shein has been valued at $100 billion in a new fundraising, more than the combined market capitalisations of Inditex and H&M, the two biggest clothing companies in the world. Shein has secured the valuation after raising between $1 billion and $2 billion from investors including General Atlantic, Tiger Global Management and Sequoia Capital China. – The Times
Shell received a tax refund of $132 million for its UK North Sea business last year, even as soaring oil and gas prices helped it to deliver global profits of more than $19 billion. The London-based oil group received a tax rebate for the fourth year running thanks to Britain’s system of tax relief to help companies with the costs of decommissioning old North Sea fields. The $131.8 million (£100 million) refund from HM Revenue & Customs was higher than the $106.6 million rebate Shell received in 2020. – The Times
