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London open: Stocks rise as investors eye Powell, US inflation
London stocks rose in early trade on Wednesday as investors turned their attention to Federal Reserve chair Jerome Powell’s second day of testimony to Congress and to this week’s US inflation reading.
At 0825 BST, the FTSE 100 was up 0.3% at 8,161.43.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “The FTSE 100 has opened on the front foot, taking cues from unruffled markets in the US despite a continued lack of clarity about when interest rate cuts will come.
“Fed Chair Jerome Powell offered few clues about when monetary policy will be eased during his congressional testimony. Policymakers are keeping a close eye on whether restrictive rates are squeezing enough demand out of the economy and, while the one hand, he said the Labour market had cooled, it was still ‘robust.’ There is still an expectation that a rate cut could come in September, but beyond that there is still much uncertainty.
“Nevertheless, US indices are still hanging close to record highs, with enthusiasm over AI possibilities and hopes for a soft landing for the economy still buoying sentiment. Eyes will now be drawn to tomorrow’s consumer price inflation report for indications about the future direction of travel. Another shift lower in headline inflation is expected, which should help maintain the largely optimistic outlook. A reading of 3.1% year-on-year is expected in June, down from 3.3% in May.”
In equity markets, BA and Iberia owner IAG flew to the top of the FTSE 100 after an upgrade to ‘overweight’ at Morgan Stanley. Budget carrier easyJet followed close behind.
Travis Perkins was up as it announced the appointment of Pete Redfern – the former boss of Taylor Wimpey – as its new chief executive.
Food outlet operator SSP Group surged as it held annual guidance after third-quarter sales rose 16%, driven by increasing demand for leisure travel. Like-for-like revenue was up 6%.
On the downside, Barratt Developments fell even as the housebuilder said annual profits were set to come in ahead of expectations despite a “challenging” economic backdrop.
Direct Line lost ground as it put out an update ahead of its capital markets day. The insurer reiterated its target of at least £100m of gross run-rate cost savings by exit 2025 and its target of a 13% net insurance margin in 2026. It also announced that it will be putting itself on price comparison websites for the first time.
Grafton was in the red as the building and DIY supplies group said revenue fell 4.4% in the first six months of the year amid challenging trading conditions as consumers held back on discretionary spending.
Wetherspoons nudged down despite saying it expects profits to hit market expectations as it closes out its financial year with strong sales momentum.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
International Consolidated Airlines Group S.a. | +4.16% | +7.20 | 180.10 |
| 2 |  |
Centrica Plc | +2.79% | +3.80 | 140.00 |
| 3 |  |
Sainsbury (j) Plc | +2.52% | +6.40 | 260.80 |
| 4 |  |
Easyjet Plc | +2.28% | +10.60 | 476.00 |
| 5 |  |
United Utilities Group Plc | +1.92% | +20.00 | 1,062.00 |
| 6 |  |
British Land Company Plc | +1.84% | +7.40 | 410.00 |
| 7 |  |
Vodafone Group Plc | +1.69% | +1.20 | 72.20 |
| 8 |  |
Land Securities Group Plc | +1.53% | +9.50 | 630.50 |
| 9 |  |
Smiths Group Plc | +1.47% | +25.00 | 1,724.00 |
| 10 |  |
Severn Trent Plc | +1.40% | +36.00 | 2,600.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Barratt Developments Plc | -2.38% | -11.70 | 479.50 |
| 2 |  |
Smith (ds) Plc | -1.43% | -6.00 | 414.00 |
| 3 |  |
Bhp Group Limited | -0.92% | -21.00 | 2,257.00 |
| 4 |  |
Rio Tinto Plc | -0.48% | -25.00 | 5,193.00 |
| 5 |  |
Antofagasta Plc | -0.46% | -10.00 | 2,167.00 |
| 6 |  |
Hsbc Holdings Plc | -0.42% | -2.80 | 666.70 |
| 7 |  |
Taylor Wimpey Plc | -0.40% | -0.60 | 150.10 |
| 8 |  |
Hikma Pharmaceuticals Plc | -0.39% | -7.00 | 1,803.00 |
| 9 |  |
Glencore Plc | -0.25% | -1.20 | 474.85 |
| 10 |  |
Whitbread Plc | -0.24% | -7.00 | 2,908.00 |
US close: Stocks mixed following Powell testimony
Major indices delivered a mixed performance on Tuesday as Federal Reserve chairman Jerome Powell headed to Washington DC to testify before the Senate Banking Committee.
At the close, the Dow Jones Industrial Average was down 0.13% at 39,291.97, while the S&P 500 advanced 0.07% to 5,576.98 and the Nasdaq Composite saw out the session 0.14% stronger at 18,429.29.
The Dow opened 52.82 points lower on Tuesday, extending losses recorded in the previous session.
The head of US central bank told lawmakers again on Tuesday that policymakers needed “greater confidence” that inflation was headed permanently lower before they could interest rates.
In remarks prepared for his semi-annual testimony before Congress, Jerome Powell also said that the risks towards the Fed’s two goals of full employment and stable inflation were “coming into better balance”. His testimony will continue on Wednesday.
On the macro slate, the National Federation of Independent Business‘ business optimism index rose to 91.5 in June, up from 90.5 a month earlier, for the highest reading since the start of 2024. The reading came in ahead of expectations for a slowdown to 89.5 but remained well and truly below the long-term average of 98.
NFIB chief economist Bill Dunkelberg said: “Main Street remains pessimistic about the economy for the balance of the year. “Increasing compensation costs has led to higher prices all around. Meanwhile, no relief from inflation is in sight for small business owners as they prepare for the uncertain months ahead.”
In the corporate space, BP shares were sharply lower after the energy giant warned investors that it would be faced with an impairment charge of between $1.0bn and $2.0bn. It also warned of lower refining margins in Q2.
Wednesday newspaper round-up: Four day working week, Post Office, Linklaters
Campaigners for a four-day working week are preparing a new pilot project on flexible working in the hope that the Labour government will be more receptive to changes in how people work. The pilot project has opened to companies to sign up for a November start, with findings to be presented to the government in the summer of 2025. – Guardian
The former chair of a Whitehall agency responsible for taxpayers’ interest in the Post Office has blamed the Horizon IT scandal on a mixture of “incomplete curiosity” and “a toxic culture” at the state-owned company. Robert Swannell, a veteran City businessman and former Marks & Spencer chair, was speaking on Tuesday before the judge-led public inquiry investigating why post office operators were wrongly prosecuted for theft and false accounting over financial discrepancies linked to bugs within the Horizon IT system. – Guardian
Top partners at magic circle law firm Linklaters have taken home almost £2m each after a bounce back in deal-making. Average payouts for equity partners increased 8pc to £1.9m in the year to April, as revenues at the firm surpassed £2bn for the first time. Paul Lewis, managing partner at Linklaters, said the firm had benefited from an “exceptional year” as pre-tax profits jumped 10pc to £942m and revenue increased to £2.1bn. – Telegraph
A growing number of FTSE chief executives are being impersonated by fraudsters who are using artificial intelligence to create convincing deepfake clones, The Times can reveal. A number of these sophisticated “CEO scams” have received publicity in recent months but many more are going unreported, according to cybersecurity experts. – The Times
Business confidence climbed to its highest point in two years over the last three months, helped by falling inflation and forecasts for better sales, a survey showed. The Institute of Chartered Accountants in England and Wales business confidence index jumped to 16.7 in the second quarter of this year, up from 14.4 in the previous three months and the highest reading since the first quarter of 2022. – The Times
