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ADVFN Morning London Market Report: Wednesday 29 January 2025

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London open: FTSE nudges lower ahead of Fed announcement

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London stocks nudged lower in early trade on Wednesday as investors eyed the latest policy announcement from the US Federal Reserve.

At 0825 GMT, the FTSE 100 was down 0.1% at 8,525.80.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Calm has descended on financial markets after the AI upheaval, which triggered a wave of selling, with investors seeing sharp falls as a buying opportunity. Focus is switching to today’s key Fed meeting and the direction of interest rates in the US. Rates being kept on hold is seen as a slam dunk prospect but there will be keen interest in chairman Jerome Powell’s words about the future path ahead, particularly given recent jitters about the prospects of a rate hike this year, which still right now looks unlikely.

“The FTSE 100 is not set for much movement in early trade, with its tech-light make-up making it more immune to the current volatility and thanks to its defensive characteristics, it’s still hanging near recent highs. The pound has strengthened slightly against the dollar, to above $.1.24 which may weigh a little on multinationals with overseas earnings. Brent Crude is trading lower, around $77 a barrel, as Trump’s tariff threats are still causing jitters about the prospects for global growth.

“The direction of domestically focused stocks may hinge on sentiment surrounding Chancellor Rachel Reeves’ speech later. She’s determined to show she’s going for growth in a big way and is planning to light a bonfire of red tape when it comes to planning regulation. Decisions on airport expansion, particularly a third runway at Heathrow, will be closely watched and could lift airline stocks, give the extra capacity it could provide.”

The US rate announcement is due at 1900 GMT.

In equity markets, Fresnillo shot to the top of the FTSE 100 as the precious metals miner met guidance with silver output in 2024 and marginally beat expectations with gold production, with full-year profits more than doubling as costs fell and commodity prices jumped.

Manufacturing firm Dowlais surged after saying it had agreed terms on a cash and share takeover by American Axle & Manufacturing. AAM is offering 0.0863 new AAM shares plus 542p a share in cash and a further 2.8 pence in the form of a final cash dividend to be paid on completion.

WH Smith rallied after it reported a 4% jump in revenue for the 21 weeks to 25 January as it hailed strong momentum in the travel business, while high street sales dropped as expected.

The retailer confirmed earlier this week that it was considering a possible sale of the high street segment.

On the downside, Raspberry Pi tumbled even as the low-cost computer platform maker said it expected to make annual adjusted core earnings of at least $36m. The shares have gained more than 150% since the IPO so weakness could be down to some profit-taking, traders said.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Ck Infrastructure Holdings Limited +3.40% +19.40 589.90
2 International Consolidated Airlines Group S.a. +2.42% +7.80 330.50
3 Scottish Mortgage Investment Trust Plc +2.21% +23.00 1,065.00
4 Prudential Plc +1.52% +10.00 666.60
5 Rolls-royce +1.44% +8.40 591.20
6 Natwest +1.43% +6.10 431.30
7 Crh Plc +1.34% +106.00 7,992.00
8 Auto Trader Group Plc +1.33% +10.40 792.00
9 Halma Plc +1.29% +38.00 2,982.00
10 Ashtead Group Plc +1.23% +64.00 5,268.00

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Bae Systems Plc -2.76% -34.50 1,216.50
2 South32 Limited -2.31% -3.90 165.00
3 Gen.acc.8se.pf -1.30% -1.75 133.25
4 Ferguson Enterprises Inc. -1.28% -190.00 14,640.00
5 Glencore Plc -1.24% -4.40 350.55
6 Haleon -1.22% -4.60 373.10
7 Diageo Plc -1.12% -28.00 2,467.00
8 Smurfit Westrock Plc -1.10% -48.00 4,297.00
9 Bp Plc -0.99% -4.15 414.20
10 British American Tobacco Plc -0.69% -22.00 3,151.00

 

US close: Markets stage partial rebound after tech sell-off

US markets put in decent gains on Tuesday but only managed to claw back some of the prior day’s tech-sector sell-off, with eyes starting to turn towards blue chip earnings and the Federal Reserve’s first policy meeting on the year.

The S&P 500 rebounded 0.9% to finish at 6,067.70 after a 1.5% slump on Monday while the Nasdaq put in a 2% gain to 19,733.59 after dropping 3.1%.

Tech stocks were hit on Monday by the news that Chinese startup DeepSeek had launched a free AI assistant it claims uses lower-cost chips and less data. DeepSeek’s open-source AI model was reportedly comparable with those of OpenAI, Google and Meta despite the company spending just $6m on its base model, compared with the hundreds of millions (if not billions) of dollars that the US firms have shelled out.

The Dow, which was immune to Monday’s tech-focused selling pressure, rose for the second day, gaining 0.3% to 44,850.35 as it closes in on its record closing high of 45,014.04 reached in early December.

“After yesterday’s tech mauling markets have looked a lot healthier today, with modest gains made by some of yesterday’s biggest losers including Nvidia and Microsoft,” said Danni Hewson, head of financial analysis at AJ Bell.

“That’s not to say investors aren’t still deeply concerned about the amount of cash being spent on the pursuit of AI gains and as those earnings updates hit screens there will be a lot of eyes taking a hard look at how much additional spend is being earmarked versus how much it’s delivering to the bottom line.”

Monetary policy, macro news steals focus

The market spotlight on Wednesday will be on the US central bank’s policy announcement, with the Fed expected to keep interest rates on hold. But what investors will really be interested in will be what policymakers will have to say on the outlook for inflation and rates going forward.

In economic news on Tuesday, US durable goods orders unexpectedly fell in December, dropping by their most in six months, as a result of a big decline in orders for transportation equipment. The total value of orders for manufactured durable goods was $276.1bn last month, down 2.2% on November, according to the US Census Bureau. The consensus forecast was for a 0.6% increase.

The S&P/Case-Shiller housing price index decreased to 332.59 points in November, down slightly from 332.90 in October.

US consumer confidence fell for a second straight month in January, according to the Conference Board, retreating to 104.1 from 109.5 in December and missing forecasts for a smaller drop to 105.8.

Finally, the Richmond Federal Reserve’s manufacturing index rose to -4 in January, up from -10 in December and ahead of expectations of a more modest increase to -8. The reading was the strongest seen in the region since May 2024.

Tech stocks rebound

Microsoft rose after comments made by Donald Trump that the company is in talks to buy TikTok, the Chinese-owned social media platform. Asked if the tech giant was in discussions with ByteDance, the app’s owner, the US president said: “I would say yes. A lot of interest. There’s great interest in TikTok.”

Microsoft’s earnings will be released after the bell on Wednesday, along with Tesla and Meta Platforms, while Apple will report on Thursday evening.

Nvidia finished the day up nearly 9% after dropping 17% the previous day, which resulted in it shedding almost $600bn from its market cap, the biggest single-day drop for a US company in history. Broadcom, which was also hammered on Monday, put in decent gains, though peer AMD fell again.

Automotive giant General Motors beat Wall Street estimates on both the top and bottom lines but dropped 9% after warning that headwinds from the Trump administration could weigh on future profits.

Boeing was in demand despite reporting an annual loss of $11.83bn for 2024, marking its largest deficit since 2020. It posted a fourth-quarter loss of $3.86bn, significantly larger than Wall Street projections, with revenue of $15.24bn falling short of analysts’ expectations.

 

Wednesday newspaper round-up: Starbucks, JPMorgan, Santander

Rachel Reeves is unveiling plans to create “Europe’s Silicon Valley” between Oxford and Cambridge as she stakes the government’s success on kickstarting economic growth and putting more pounds in people’s pockets. The chancellor will announce a blueprint to improve infrastructure across the region that will add up to £78bn to the UK economy within a decade, according to industry experts, and put it at the forefront of science and technological advances. – Guardian

Starbucks reassured Wall Street with a smaller-than-expected drop in comparable sales, an early sign that its efforts to revive sluggish demand could be bearing fruit. The world’s largest coffee chain, which earlier this month announced that people using its cafes cross North America need to buy something, is in the midst of a turnaround bid to win back customers. – Guardian

JP Morgan is in talks to lease space at Credit Suisse’s former UK headquarters in Canary Wharf after it demanded staff return to the office five days a week. The investment bank is understood to be discussing a deal with UBS to rent 150,000 sq ft of space at One Cabot Square office complex. Although the space amounts to less than a third of the 540,000 sq ft building, it is understood that the bank could expand its presence there further to lease as much as half of it. – Telegraph

China is building a gigantic laser-ignited fusion power laboratory that is 50pc larger than its US counterpart as the two superpowers spar for energy supremacy. The part-built research centre near the city of Mianyang, in the Sichuan province, has been observed in satellite imagery, with experts warning it could be used to advance both power generation and nuclear weapons. – Telegraph

The proposed Sizewell C nuclear plant will start generating electricity in 2035 if it gets the go-ahead by the summer, its developers claimed, despite repeated delays plaguing its sister station. The first reactor from the Suffolk nuclear plant will enter commercial operation in 2035 and the second in 2036, according to a presentation published by Sizewell that described a final investment decision by this summer as “essential”. EDF has previously given vaguer guidance of Sizewell starting up in the “mid 2030s”. – The Times

The chairman of Santander’s British business is to leave this year in a surprise exit that will fuel City speculation about the Spanish bank’s future in the UK. William Vereker’s impending departure from Santander UK was announced little more than a week after the group was forced to deny reports that it is reviewing its operations here and could decide to withdraw from British high streets. – The Times

 

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