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London open: Stocks rally as investors eye Fed announcement
London stocks rose in early trade on Wednesday, taking their cue from an upbeat finish on Wall Street as investors eyed the latest policy announcement from the US Federal Reserve.
At 0840 GMT, the FTSE 100 was up 1.4% at 7,276.25.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “There are signs of optimism coming through on financial markets today with the FTSE 100 opening up 1.2% in early trade amid fresh signs a negotiated deal to end the conflict in Ukraine may be a step closer.
“This comes hot on the heels of a rally in Asia and the US, where there are genuine hopes inflation may have peaked.
“All eyes are firmly focussed on the Federal Reserve meeting later today – the first in four years, where an interest rate hike is expected. Should this fail to materialise, further volatility across European and the UK market should be expected. It’s also worth keeping in mind the Russian invasion of Ukraine means the frequency and extent of rate rises may not be as high as previously predicted.
“Of course, oil prices are still very much front and centre of the financial – and consumer – worlds’ minds. Prices rose for the first time in three days on Wednesday, with Brent crude reaching $102 a barrel. But exactly where they’re going to land long-term is very much determined by demand. With fresh, albeit tentative, hope of constructive talks between Ukraine and Russia swirling, there is scope for some further heat to come out the oil price. However, it’s more likely that continued volatility is coming down the pipes.”
As far as the Russia-Ukraine conflict is concerned, Ukrainian president Volodymyr Zelensky confirmed in a late-night address on Wednesday that meetings between officials from both sides were ongoing, adding that “the positions at negotiations are more realistic now”.
In UK equity markets, Computacenter gained as it hiked its full-year dividend after saying it had delivered double-digit revenue and profit growth in 2021.
Software and cloud services specialist Bytes Technology advanced after it hailed “another upbeat year” and said results were ahead of expectations.
Elsewhere, Close Brothers was boosted by an upgrade to ‘buy’ at Shore Capital.
On the downside, Avast tumbled after the UK’s Competition and Markets Authority said its acquisition by US rival NortonLifeLock raises competition concerns and that the deal could be referred for an in-depth probe if the concerns are not addressed.
Gold miner Centamin lost its shine as its full-year profits fell short of expectations.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Scottish Mortgage Investment Trust Plc | +6.26% | +55.00 | 933.80 |
| 2 |  |
Burberry Group Plc | +4.52% | +72.00 | 1,663.50 |
| 3 |  |
Easyjet Plc | +4.51% | +23.60 | 546.40 |
| 4 |  |
Prudential Plc | +4.20% | +42.00 | 1,042.00 |
| 5 |  |
Micro Focus International Plc | +4.06% | +14.70 | 376.60 |
| 6 |  |
Coca-cola Hbc Ag | +3.72% | +59.50 | 1,657.00 |
| 7 |  |
Intercontinental Hotels Group Plc | +3.72% | +185.00 | 5,156.00 |
| 8 |  |
Mondi Plc | +3.54% | +50.50 | 1,477.50 |
| 9 |  |
Croda International Plc | +3.46% | +244.00 | 7,300.00 |
| 10 |  |
Melrose Industries Plc | +3.46% | +4.35 | 130.20 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Bae Systems Plc | -2.38% | -17.40 | 715.00 |
| 2 |  |
Pearson Plc | -1.31% | -10.80 | 816.00 |
| 3 |  |
Centrica Plc | -0.97% | -0.76 | 77.66 |
| 4 |  |
United Utilities Group Plc | -0.92% | -10.00 | 1,073.50 |
| 5 |  |
British American Tobacco Plc | -0.89% | -27.50 | 3,059.00 |
| 6 |  |
Imperial Brands Plc | -0.80% | -12.50 | 1,545.50 |
| 7 |  |
Severn Trent Plc | -0.48% | -14.00 | 2,904.00 |
| 8 |  |
Fresnillo Plc | -0.06% | -0.40 | 700.20 |
| 9 |  |
Shell Plc | -0.00% | -0.00 | 1,894.60 |
| 10 |  |
Nmc Health Plc | -0.00% | -0.00 | 938.40 |
Europe open: Shares rally on China stimulus, Ukraine talks as investors eye Fed
European shares rallied at the open on Wednesday, driven by hopes that peace talks to end the Ukraine war were making positive progress as investors also eyed a meeting of the US Federal Reserve for an interest rate rise.
The pan-European Stoxx 600 index was up 2% with all major bourses higher. Asian shares rebounded from Tuesday’s sell-off, with Hong Kong’s Hang Seng surging 9%, as China’s Vice Premier Liu He said Beijing will roll out more measures to boost the Chinese economy as well as favourable policy steps for capital markets.
Ukrainian president Volodymyr Zelenskiy said there was room for compromise in talks with Russia ahead of a fresh round of discussions, despite more shelling by Moscow’s of Kyiv.
“The meetings continue, and, I am informed, the positions during the negotiations already sound more realistic. But time is still needed for the decisions to be in the interests of Ukraine,” Zelenskiy said in a video address early on Wednesday.
On the economic front, the focus is on the Federal Reserve meeting later today where an interest rate hike is expected.
“Should this fail to materialise, further volatility across European and the UK market should be expected. It’s also worth keeping in mind the Russian invasion of Ukraine means the frequency and extent of rate rises may not be as high as previously predicted,” said Hargreaves Lansdown analyst Sophie Lund-Yates.
“Of course, oil prices are still very much front and centre of the financial – and consumer – worlds’ minds. Prices rose for the first time in three days on Wednesday, with Brent crude reaching $102 a barrel.”
“Exactly where they’re going to land long-term is very much determined by demand. With fresh, albeit tentative, hope of constructive talks between Ukraine and Russia swirling, there is scope for some further heat to come out the oil price.”
In equity news, shares in cyber security firm Avast slumped 9.3% as the firm’s takeover by rival NortonLifeLock faced a competition probe.
Sweden-based private equity fund EQT jumped 9.93% after it said it had agreed to buy investment firm Baring Private Equity Asia in a deal worth €6.8bn.
Dutch tech investor Prosus, which has stake in China’s Tencent, rebounded 17.8% after hitting all-time lows in the previous session.
US close: Dow adds almost 600 points on eve of Fed decision
Wall Street stocks closed above the waterline on Tuesday, even as traders remained concerned about the ongoing Russia-Ukraine conflict and a spike in Covid-19 cases in China, ahead of the Federal Reserve’s all-important interest rate decision.
At the close, the Dow Jones Industrial Average was up 1.82% at 33,544.34, as the S&P 500 added 2.14% to 4,262.45 and the Nasdaq Composite was ahead 2.92% at 12,948.62.
The Dow closed 599.1 points higher on Tuesday, after a flat performance in the previous session as the Russia-Ukraine conflict continued to heat up and investors prepared for the Fed to raise its target funds rate for the first time in almost four years.
“In the US indices have managed to make headway, providing a contrast to Europe,” said IG chief market analyst Chris Beauchamp.
“Oil’s decline has provided a break for the relentless drumbeat of inflation concerns, although the vital commodity is still substantially higher than a month ago, meaning that while the worst of the forecasts now look excessive, a continued rise in CPI is still the expectation.
“Tomorrow’s FOMC meeting provides a vital moment for markets, as traders wait to see what the Fed will say and what their view is on the outlook for the next few months.”
News that Ukrainian capital Kyiv had enforced a 35-hour curfew was in focus earlier, with the curfew starting on Tuesday evening amid ongoing Russian missile strikes on the city.
Russia and Ukraine were set to resume ceasefire talks on Tuesday, as Moscow neared multiple deadlines on its debt payments.
Also drawing an amount of investor attention was the fact that China was now facing its worst Covid-19 outbreak since the height of the pandemic, raising fresh concerns regarding the recovery of the global economy moving ahead.
On the macro front, wholesale price pressures in the US edged past forecasts last month amid a spike in energy prices.
According to the Department of Labor, the headline rate of the year-on-year increase in total final demand prices was steady versus the month before at 10.0%.
In comparison to January however, the 0.8% month-on-month increase in prices was exactly as expected by economists at Barclays.
Elsewhere, manufacturing activity in the New York region declined in March for the first time since early in the Covid-19 pandemic, according to a survey released on Tuesday.
The New York Fed’s Empire State general business conditions index fell to -11.8 from 3.1 in February.
That marked the lowest reading since May 2020 and was below expectations of 7.0.
According to the survey, 24% of respondents reported that conditions had improved over the month, while 35% said they had worsened.
The Federal Reserve, meanwhile, kicked off its two-day policy meeting on Tuesday, with market participants expecting the central bank to raise rates by 0.25% – the first interest rate hike since 2019 – in order to combat soaring inflation.
In the corporate space, airlines were in the green amid a raft of expectation upgrades, with Delta Air Lines up 8.7%, JetBlue Airways ahead 7.22%, Southwest Airlines rising 4.89%, and United Airlines jumping 9.19%.
Delta, JetBlue and Southwest all raised their earnings outlooks for the first quarter on Tuesday, while United reaffirmed it was anticipating operating revenue at the upper end of its previous guidance.
On the acquisition front – and in a rather bizarre piece of news – meme stock and cinema operator AMC Entertainment rose 6.78% after it announced it was buying 22% of Hycroft Mining, and the 71,000-acre Hycroft Mine in Nevada.
Hycroft shares were ahead 9.35% by the closing bell.
Wednesday newspaper round-up: HSBC, fracking, Discovery
HSBC is to shut a further 69 branches, on top of the 82 it axed last year, claiming the pandemic has accelerated the shift to digital banking. It is the latest in a line of banks to announce it is reducing its network in response to changing customer habits. Consumer organisation Which? said the number of closures during the last few years was “alarming” and that millions of people were not yet ready or able to go fully digital. – Guardian
The prospect of fracking in England has been dealt another blow as only a handful of MPs for constituencies with exploration licences support the measure in their area, the Guardian can reveal. When asked if they would support fracking in their constituencies, only five of the 138 MPs said they would. Forty one said they would be against it, while the rest did not reply, or declined to comment. – Guardian
Elon Musk has blamed the soaring cost of parts for raising the price of every Tesla model. The electric car maker has increased the cost of its cars in the UK in recent days and raised them twice in the US and China over the past week. Its cheapest car in Britain, the Model 3, now costs £43,990, or £1,000 more than earlier this month. The price of the Long Range version is now £2,000 higher. – Telegraph
The boss of Discovery received a total pay package worth $246.6 million last year as the American media group prepares for its blockbuster merger with WarnerMedia. David Zaslav’s overall compensation, which includes stock options worth almost $203 million, is more than double that of any other disclosed by a S&P 500 company for 2021 so far. His base salary remained at $3 million, according to a market filing. His pay was boosted by stock awards worth $13.1 million and bonus payments of $26.4 million, on top of the vast tranche of options handed to him last spring. – Telegraph
Regulators are investigating possible conflicts of interest at America’s biggest accounting firms, such as Deloitte, EY, KPMG and PwC. The US Securities and Exchange Commission is looking into whether consulting and other non-audit services sold by the firms undermine their ability to conduct audits independently, sources confirmed to The Times. The investigation was first reported by The Wall Street Journal. – Telegraph
