- FTSE 100 falls 80 points to 8,288
- Results impress from Rolls-Royce, Shell, Next, Barclays
- Bank of England cuts interest rate to 5%
- BoE governor Andrew Bailey warns against cutting rates "too quickly"
4.07pm: Banks a big drag on FTSE
The FTSE 100 is heading for a sizeable loss on Thursday, down 1% to below 8,300, despite having started higher and topped 8400 earlier for the first time since mid May.
Blue chips initially rose on the back of the Bank of England's first rate cut in 16 years, before selling off as investors and analysts chewed over the nature of the MPC's decision and comments.
Now there seems to be caution among bank sector and financial investors, with NatWest down 6.8%, HSBC down 6.7%, StanChart down 5.4%, Lloyds down 5.2%, Barclays down 4.7% and Prudential down 4.5%.
Leading the fallers on the index were on the back of results, with Melrose down 12.9% and Schroders down 9.2%.
Across the Atlantic, the S&P 500 is down 0.8% and the Nasdaq has fallen 1%, with the Russell down 2.25%.
4pm: Another September cut still possible, says one
Comments from BNP Paribas economists, noting that the BoE decision to cut rates to 5.0% was followed by a relatively hawkish Bank of England press conference, suggesting that "several MPC members for whom the decision was a close call may prefer a relatively gradual pace of monetary policy easing".
"We are a little more optimistic than the BoE on services inflation over the coming months, and so we continue to hold our view that it will cut again in September.
"However, we see risks skewed towards a delay until November."
On the other side, the BoE "did not explicitly push back on market pricing", though the medium-term inflation forecast that undershoots the 2.0% inflation target "is to us an implicit sign that the BoE may see the neutral rate as a little lower than markets think".
Wells Fargo economists forecast only one more policy rate cut this year, in November.
"We expect somewhat faster easing in 2025, and forecast a cumulative 125 bps of rate cuts next year which would see the policy rate end 2025 at 3.50%."
3.51pm: Glencore former employees charged with corruption
The Serious Fraud Office (SFO) has today charged five ex-Glencore PLC employees with "conspiring to make corrupt payments in order to benefit commodities giant Glencore’s oil operations in West Africa".
Alex Beard, the billionaire former head of oil at Glencore, was one of those charged with corruption by the UK white-collar police, along with Andrew Gibson, Paul Hopkirk, Ramon Labiaga and Martin Wakefield.
The five have been charged in connection with the awarding of a range of oil contracts variously spanning Cameroon, Nigeria and the Ivory Coast from 2007 to 2014.
Andrew Gibson, Beard's former second in command, and Martin Wakefield were also charged in relation to the falsification of invoices to Glencore’s London office.
3.43pm: Sell-off on both sides of the pond
Crikey, the Footsie and US stocks are all really tumbling now.
The FTSE 100 is down 75 points or 0.9%, while the FTSE 250 is down 0.7%.
In the US, the S&P 500 is down 0.35% and the Nasdaq 0.43%, with the Dow Jones down 0.8% and Russell 2000 down 1.2%.
3.35pm: One BoE cut per quarter going forward
A longer look at the BoE decision has been made by Rabobank senior macro strategist, Stefan Koopman, who says he still thinks the MPC will cut rates once per quarter going forward, with the next move forecasted for November.
Rapid successive cuts are unlikely, based on Governor Bailey's emphasis on being "careful not to cut interest rates too quickly or too much", and the 5-4 vote split, with internal and external members on both sides showing the MPC "cannot be accused of groupthink".
Koopman adds: "The direction of travel seems clear, but the narrow vote margin means that predicting specific meeting outcomes will remain particularly challenging."
The previous meeting showed the MPC indicated they wanted to assess inflation’s persistence at the August forecast round.
"The MPC now judges that the impact from past external shocks has abated and there has been ‘some progress’ in moderating risks of persistence in inflation.
"The minutes reveal that the five members who voted for a cut argued that “there had been a normalization in inflation expectations, and forward-looking indicators such as the Decision Maker Panel survey pointed to waning wage and price pressures.
"The recent strength in services inflation had in part continued to reflect more volatile components of this series."
3.23pm: BoE Decision Maker Panel
The Bank of England’s Decision Maker Panel shows firms plan to raise their prices by 3.7% over the year from July, up from 3.6% in June.
The three-month average of firms’ own price expectations fell to 3.7% in July from 3.9% in June, based on data collected between 5 and 19 July.
Companies' one-year ahead CPI inflation expectations fell to 2.5% in July, from 2.8% in June.
Rob Wood at Pantheon Macroeconomics says the DMP "supports the MPC’s decision to cut interest rates today as the survey shows interest rates continuing to bear down on wage and price inflation".
Smoothing through volatility in the single-month figures, firms said they raised prices 4.2% in the three months to July, down from 4.6% in the three months to May and the lowest since September 2021.
"This suggests recent strong CPI services inflation readings will fade."
Recruitment difficulties eased, employment growth stayed weak, inflation expectations fell and realised wage growth also slowed, Wood notes, "all helping the MPC’s argument that inflation pressures continued to recede."
3.12pm: Flip it and reverse it, FTSE falls again
Just when you think you might have an idea what direction the FTSE 100 is going to close the day, the markets pull the rug from under you.
But, just as in the last couple of weeks, if the US markets do well, it seems to take some of the wind out of the UK market's sails.
The pound has also cut some of its losses against the dollar in the past 40 minutes.
The FTSE 100 and 250 have dwindled lower in this time, with the blue-chip benchmark falling 26 points or 0.3% and the mid-cap index losing 30 points or 0.1%.
Poor US manufacturing activity data, per the ISM index, which dropped to an eight-month low amid a slump in new orders, was an extra spark for markets.
Jobless Claims - Hideous and rising
ECI (Fed's preferred wage measure) - cooler.
UCL - cooler.
Vacancy to Unemployed ratio - lower.
Hiring rate - lower.
Quits rate - lower.
ADP - lower (lol)
And now ISM Mfg - as soft as it gets, across the board.
If NFP misses tomorrow... pic.twitter.com/qV2Omr9jrw
— Rishi Mishra (@aRishisays) August 1, 2024
2.47pm: US movers
At the other end of the scale from Meta, a big faller among the Nasdaq's 100 largest companies was Moderna Inc, tumbling 15% in New York and almost 19% on the Euronext.
This followed the vaccine maker slashing full-year sales guidance due to lower sales in Europe and the "competitive environment" for respiratory vaccines in the US.
The next things US company followers are eyeing are earnings from Apple and Amazon after the closing bell in New York this evening.
Both shares are up slightly, with analysts tipping both to beat expectations.
2.40pm: Meta leaps at the open, S&P rises
Meta shares jumped 10% at the open, adding around $123 billion in market value, following the Instagram owner's earnings last night.
However, the gain has been quickly trimmed to 8/8%.
Other tech titans are not moving as much in early trades, with Microsoft and Apple just above flat, Nvidia up 1%, while Tesla is down 2%.
Overall, the Nasdaq is up 0.4%, the S&P 500 has risen 0.55% and the Dow Jones has gained 0.6%, while the Russell 2000 is up 0.5%.
2.23pm: UK stocks outperforming
OK, so now London stock markets have decided it's on balance today is a good one, and the FTSE indices are moving higher.
The Foostie is up 17 or 0.2% and the 250 has added 64 or 0.3%.
A fall in the pound of 0.5% versus the dollar and 0.2% against the euro might be helping.
Looking at the bigger caps in the indexes, most are on the front foot. In the top 20 of the FTSE, Rolls-Royce 11%, LSEG 4%, BAT is up 2.1%, BAE Systems 1.2%, Shell is up 1.6%, BP 0.8% and AstraZeneca 0.5%.
On the back of other results today, Next is up 8.8%, Smith & Nephew 6.4% and Haleon 3.4%.
In Europe, German's DAX and Italy's FTSE MIB are down 1% and France's CAC 40 has dropped 1.3%.
The continent-wide Euiro Stoxx 600 is down 0.33%, with Rolls, Next and S&N helping limit losses.
1.16pm: Will one small cut make much difference?
One quarter-point interest rate cut "isn’t going to make a huge amount of difference at street level", says Laith Khalaf, head of investment analysis at AJ Bell.
"But simply the direction of travel could unleash some animal spirits in the housing market, and in the wider economy," he says.
Interest rates moving onto a downward path will also help the new chancellor Rachel Reeves balance the books, he adds, with government debt interest payments "still uncomfortably high" and GDP growth forecast to remain limp at just 0.8% over the next year.
"Then again, the Bank isn’t exactly known for its Tiggerish optimism when it comes to economic projections."
Unsurprisingly, free market think tank the Institute of Economic Affairs wants more cuts.
The decision was "finely balanced but surely correct", says IEA economics fellow Julian Jessop.
"The aim should now be to return rates to a neutral level of around 4% by early next year," he says, as the Bank’s economic forecasts "point the way", with inflation expected to pick up only temporarily and then fall back, even based on market expectations of further rate cuts.
"Even at 5%, interest rates are still high and will therefore continue to bear down on inflation, especially as the Bank is persisting with ‘quantitative tightening’ as well," he says.
1.05pm: Muted market reaction to BoE
The pound is down 0.5% against the US dollar to 1.2792, around a three-week low.
Otherwise, the market impact has been muted so far, says market analyst Kathleen Brooks at XTB, noting that GBP/USD has bounced off earlier lows.
UK Gilt yields are lower across the curve, and the FTSE 100 is up 0.2%, but as it is bucking the trend for weaker European equities that is more to do with company results today and oil prices lifting Shell and BP.
"The move in Gilt yields is likely a reaction to the shift to the longer term BOE forecasts for growth, inflation and bank rate, which justify lower UK yields. Thus, the pound may struggle to break above $1.30 in the medium term."
12.46pm: BoE 'in no rush to cut again'
The initial spike in the FTSE 100 and 250 has dissipated as the Bank of England decision and comments are chewed over more deeply.
Ruth Gregory at Capital Economics says the BoE is "in no rush to cut again", with the accompanying guidance and forecasts suggesting "it will proceed cautiously".
"Accordingly, we now think the next 25 basis point cut will come in November instead of September. And the risks to our forecast are tilted towards cuts being a bit slower and smaller than we currently expect."
There were three ways why the MPC decision "felt like a 'hawkish cut'," she says, including the MPC tweaking its forward guidance by adding that policy would remain restrictive for sufficiently long until, in its words, the risks to inflation returning to the 2% target had dissipated further.
Inflation forecasts below the 2% target in three years’ time and Bailey's comment that "we need to be careful not to cut rates too quickly or by too much", lend support to the view that rates will fall further than investors anticipate, she adds.
Gregory says: "That could be an attempt to avoid giving the impression the MPC is going to cut rates rapidly. We suspect today’s cut is a case of the Bank moving a bit sooner, rather than further, than we had anticipated.
"We still think that a fading in services inflation and below-target CPI inflation will prompt the Bank to cut rates to 4.50% by the end of this year and 3.00% next year, rather than 3.75% as markets expect. That said, if we are wrong, it’s likely to be because rate cuts are slower and smaller than we currently expect."
12.31pm: BoE 'leap of faith' should support growth
The Bank of England base rate cut decision "should help to support growth by encouraging consumption and investment", says Sam Miley, managing economist at CEBR.
Miley says "However, this also risks adding further inflationary pressure from the demand side of the economy. This will be monitored closely at upcoming monetary policy decisions."
Jeremy Batstone-Carr, strategist at Raymond James, says the decision shows the MPC "remains deeply divided on its outlook regarding inflation", with concerns around wage growth and service sector price pressures.
Despite these, he says the committee "has taken a leap of faith in cutting rates, hoping to stimulate consumers with lower borrowing costs and increased spending power".
12.15pm: 'Must be careful not to cut too much or too quickly' says Bailey
The decision to cut rates to 5.0% was "finely balanced", says BoE governor Andrew Bailey.
"The risks of higher inflation remain. We need to make sure inflation stays low. So we have to be careful not to cut interest rates too much or too quickly," he says.
He says the MPC expects inflation to rise again this year, to around 2.75%, "but we expect this increase to be temporary, with inflation coming back down next year.
"Over the coming years we need to make sure that inflation will continue to stay low."
It is worth noting that while the BoE raised its 2024 growth forecast, it left leaves 2025 and 2026 unchanged, and lowered its CPI forecasts to further below its 2% target, seeing inflation at 1.7% in mid 2026 and 1.5% in 2027, though inflation risks are seen as skewed to the upside.
12.10pm: MPC explains why it cut rates
The FTSE 100 has moved back into positive territory after the BoE decision, jumping 25 points to 8,393.
And the FTSE 250 has too, rising 40 points to 21,641.
In its statement, the BoE said the MPC voted to reduce the bank rate by 0.25 percentage points to 5%, though four committee members preferred to maintain the base rate as it was.
The MPC has also published an updated set of projections for activity and inflation in the accompanying August monetary policy report.
It was noted that UK CPI inflation was 2% in both May and June, in line with the committee's target, though CPI is expected to increase to around 2.75% in the second half of this year, as declines in energy prices last year fall out of the annual comparison.
On cutting the base rate, the MPC said: "It is now appropriate to reduce slightly the degree of policy restrictiveness.
"The impact from past external shocks has abated and there has been some progress in moderating risks of persistence in inflation.
"Although GDP has been stronger than expected, the restrictive stance of monetary policy continues to weigh on activity in the real economy, leading to a looser labour market and bearing down on inflationary pressures.
"Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further.
"The Committee continues to monitor closely the risks of inflation persistence and will decide the appropriate degree of monetary policy restrictiveness at each meeting."
The Monetary Policy Committee voted by a majority of 5-4 to reduce #BankRate to 5%. Find out more: https://t.co/zBZeLlwSxD pic.twitter.com/YOcCTfER5o
— Bank of England (@bankofengland) August 1, 2024
12.02pm: BoE cuts rates
The Bank of England has cut the interest rate to 5.0% from 5.25%.
It was a close vote by the members of the Bank's monetary policy committee (MPC) of 5-4, swinging from the 7-2 majority in favour of holding last time.
11.58am: Pound the worst performer this week
The pound is currently the worst-performing G10 currency on a five-day view, notes Rabobank forex analyst Jane Foley.
"That contrasts with its position as the best performing G10 currency in the year to date, which it is holding onto this morning by a hair’s breadth.
"The recent softness of the GBP can be largely explained by the change in expectations regarding the prospect of a BoE rate cut today.
"The results of the Bloomberg economists’ survey, published last week, suggest that the majority were in favour of a rate cut announcement today – though it is likely that most forecasters would admit that it could be a close decision."
Aside from rate cut risks, Foley notes that the bigger picture has been more supportive of the pound, with the more stable political outlook adding to hopes that investment and growth in the UK can improve.
Additionally, the new Chancellor Rachel Reeves has been busy trying to build a reputation as someone that can be trusted with the country’s purse strings.
"A reputation of fiscal prudence could help with Reeve’s aim to rally private sector investors. While we recognise that the new government’s honeymoon period could run out of steam, possibly before the UK’s October budget, we continue to favour buying GBP on dips vs. the EUR and look for a move to EUR/GBP 0.83 on a 6-month view," says Foley.
11.45am: Bets on BoE cut increase
Market betting on a BoE rate cut is pointing increasingly to a rate cut - which could mean a more volatile reaction if rates are held.
The swaps market has moved to a 62% probability of the Bank's monetary policy committee (MPC) cutting rates from the current 5.25% when we get the decision, which is due in 15 minutes.
Last week the bets were nearer 50-50%, while last night economists were saying it was too close to call.
This morning's easing of the pound also suggests currency markets expect this result.
11.35am: Catching up on other stories
There are few other stories to note this morning, including that shipbuilding yard Harland & Wolff has unveiled an emergency loan in its latest bid to remain afloat.
The company, which owns the Belfast shipyard where the Titanic was built, announced an agreement to increase its credit facility by US$25 million (£19.5 million).
France's Worldline has also slumped 17% to a record low as the payments group cut full-year guidance, saying consumer spending was slowing down and a recovery remains uncertain.
Oxford Nanopore Technologies PLC (LSE:ONT), the DNA sequencing tech group, rallied 12% after drug giant Novo Nordisk bought a £50 million stake.
This was part of an equity issue and is the beginning of a larger investment from the Danish pharma firm, which plans to increase its stake through purchases in the secondary market.
Across the Atlantic, billionaire investor Bill Ackman has cancelled the planned public listing of his closed-end fund Pershing Square USA in an embarrassing U-turn.
Having made an almost Trumpian pronouncement that the listing would be among the largest IPOs ever, the process has been dogged by apparent inertia from would-be backers.
And a couple of the results I've not had time to mention.
BAE Systems PLC (LSE:BA.) has lifted guidance and hailed a strong start to the year on the back of continued high demand for weapons.
Haleon PLC (LSE:HLN, NYSE:HLN) upped its forecast for profit growth this year after a strong performance from its power brands Sensodyne, parodontax and Centrum in the first-half of the year.
11.20am: Real-time data
The Office for National Statistics has shared some 'real time' economic data for the past week, including retail footfall, flight numbers and job vacancies.
The daily average number of UK flights increased by 4% year on year for the week to 28 July, also up 1% on the previous week.
Summer holidays were also in effect on retail footfall, which increased 4% week-on-week, which was also up 1% on the equivalent week of 2023.
Online job adverts on 26 July were up 6% on the previous week but numbers were 12% lower than the equivalent week a year ago.
These fortnightly results from the Business Insights and Conditions Survey (BICS) showed that June saw a negative 5% year-on-year growth rate for sales by small businesses, down 15 percentage points from the growth rate in June 2023, while the year-on-year growth rate for employees in paid jobs in small businesses was at 1%, remaining broadly unchanged from the rate a year before.
10.51am: Why markets are down?
Why are the FTSE and other European markets down this morning?
"We may also be seeing investors taking risk off ahead of the impending BoE announcement," said Chris Peters, trading floor manager at Accendo Markets.
Markets have also been driven lower this morning by sectors such as financials, autos and airlines on the back of disappointing results from Wizz Air and a trimming of guidance by Melrose, which along with Rolls-Royce mentioned supply chain issues.
Looking to the Bank of England interest rate decision, he says it appears to be on a knife edge ahead of the 12pm announcement.
"If they make the decision to not cut, investors will be looking for forward guidance, similar to that of the Fed last night implying a rate cut remains likely in September."
European markets sharply lower, says Josh Mahony at Scope Markets, "as traders continue to weigh up the higher-than-expected headline and core eurozone CPI rates reported yesterday".
Nonetheless, he says investors hoping for a blockbuster September "should feel encouraged by yesterday’s FOMC meeting, which saw Powell shift the focus back to a dual mandate that attaches greater importance to ensuring stability within the housing market going forward".
Keep an eye on the US jobs report tomorrow, where any further signs of weakness will bring increased confidence of easing from the Fed.
As for the UK, even though the Bank of England is possibly on the verge of cutting rates for the first time in over four years, Mahony says UK stocks markets are showing "precious little exuberance at the prospect of an impending rate cut, with the relative strength of the FTSE 100 coming down to small pockets of strength for the likes of Shell and Rolls-Royce".
10.46am: Buybacks ago-go
There seemed to be a lot of share buybacks this morning didn't there, with new announcements figures today from Shell, Barclays and Melrose in particular.
Our friends at AJ Bell have helped us out and tell us that so far £49.5 billion buybacks have been announced for 2024 so far.
Shell is now the number-one buyer-back this year with £8.3 billion, and Barclays has entered the top 10, kicking out Diageo.
Here's the top 10:
- Shell £8.3bn
- HSBC £6.3bn
- BP £5.7bn
- Vodafone £3.4bn
- Lloyds £2.0bn
- Standard Chartered £2.0bn
- Reckitt Benckiser £1.8bn
- Barclays £1.75bn
- Prudential £1.6bn
- NatWest £1.5bn
10.03am: FTSE indexes fall further, European markets too
The Footsie is continuing to slip lower, down almost 30 points or 0.35% now.
HSBC, down nearly 5%, is a big weight, which follows China's Caixin manufacturing PMI, which unexpectedly fell into contraction territory for July, the first time this year.
Seven of the index's top 10 largest companies are in the red, with other fallers being Schroders. Melrose Industries and Antofagasta.
Led by Wizz Air's 14% decline on the back of its results, the FTSE 250 index is down 85 points or 0.4%.
Things in Europe are moving even lower too, with the IBEX down 1.1%, DAX falling 1.2%, CAC 40 slipping 1.3% and FTSE MIB tumbling 1.6%.
9.54am: Melrose mauled
Melrose Industries PLC (LSE:MRO, OTC:MLSPF) shares have also tumbled 7.5%, even though the aerospace company's profits beat expectations and guidance was maintained for this year, though due to supply chain issues, 2025 revenue guidance was trimmed.
"Some may find it disappointing that there is no increase in guidance, especially considering GE and RTX’s performance this reporting season," say analysts at Peel Hunt.
However, they also note MTU Aero Engines’ reiteration this morning.
"The rationale is that the well-documented broader supply chain issues in the industry will likely impact 2H.
In light of this, Melrose has revised its 2025 revenue expectations down from £4.0 billion to £3.8 billion, with the majority of the reduction in Structures, though EBITA guidance remains unchanged at £700 million.
9.48am: Wizz the worst
Wizz Air Holdings PLC (AIM:WIZZ) shares have dived after the airline reported a 44% slump in first-quarter operating profit and lowered the joystick on its full-year profit forecasts.
"Fresh from being nominated ‘worst’ airline for customer service by Which?, Wizz Air has now served up a set of results that have angered investors," says analyst Russ Mould at AJ Bell.
"Rather than being backlash to the unwelcome Which? trophy with travellers turning their back on the business, the problems lie with certain engines causing some of its fleet to be grounded.
"This is the latest in a string of problems for the industry, including consumers waiting until the last minute to book flights which has triggered a price war among airlines hoping to fill their planes."
Wizz shares have fallen 14% to a nine-month low.
9.37am: UK manufacturing PMI stronger than expected, but inflation concerns
The UK manufacturing sector's recovery strengthened last month, according to the S&P PMI survey just out.
Output, new orders and employment all strengthened, but input price inflation climbed to an 18-month high.
The UK manufacturing PMI for July came in at 52.1, up from 50.9 the month before and above the 51.8 expected.
The recovery remained broad-based, S&P says, with production volumes rising across the consumer, intermediate and investment goods industries.
"UK manufacturing has started the second half of 2024 on an encouragingly solid footing," said Rob Dobson, director at S&P Global Market Intelligence.
"Hopes for an economic revival and reduced political uncertainty took confidence to one of its highest levels for two-and-a-half years, with 60% of companies surveyed now forecasting output will rise over the coming 12 months."
He says inflationary pressures "remain a blot on the copybook", with input costs rising to the greatest extent in one-and-a-half years, putting the blame on the ongoing Red Sea crisis and associated freight issues.
These are having a "severe impact on prices which are then sustaining a focus on cost-caution and cash flow protection at manufacturers ... leading to cutbacks in purchasing and a drive to leaner inventory holdings".
9.22am: Water sector pressure
Pressure is mounting on Thames Water’s licence to supply water to London after a second credit rating agency downgraded its rating to 'junk' or sub-investment grade.
Thames’ licence stipulates it must have two investment grade ratings on its debt and was already theoretically in breach after Moody’s, downgraded its debt last week.
Rating agency S&P joined it yesterday evening, downgrading Thames’s senior bonds to BB from BBB- or two notches below investment grade.
“We do not believe that Thames Water will have a remedy plan to cover its liquidity needs by 1.1x for the next 12 months before the autumn of 2024,” S&P said.
9.02am: FTSE joins European markets in red, as euro and pound fall post-Fed
Both FTSE 100 and FTSE 250 are marginally in the red now, down one point and 33 points respectively.
They are joining the rest of their European counterparts in losing ground this morning.
A 0.9% fall for Germany's DAX is the best of the rest, with the CAC 40 and FTSE MIB both down almost 1.1%, while Spain's IBEX 35 is down just under 1%, with the wider Euro Stoxx 600 falling 0.33%.
The euro is down 0.3% versus the dollar, at $1.0795, while the pound is down 0.55% versus the greenback at $1.278. The EUR/GBP rate is up 0.3% at £0.8444.
This is on the back of the US Federal Reserve decision last night, where rates were left unchanged but Fed chief Jerome Powell signalled that a September rate is very possible.
On the FOMC decision, macro expert Salman Ahmed at Fidelity International says: “Chair Powell set September up for the start of the cutting cycle as both labour market and inflation progress helped the Fed to build the cutting signal.
"The combination of statement and the press conference turned out to be a strong hit," Ahmed adds, meaning that uncertainty around Fed policy moves this year "have reduced significantly".
ING currency analyst Chris Turner says Powell "seemingly deliberately adopted a new script that a September rate cut 'could be on the table'.
"That phrase – together with the emphasis on the switch back to the central bank's dual mandate – did actually see US short rates move."
He notes that US two-year Treasury yields dropped around 10 basis points and back to levels last seen in early February.
"And importantly, the Fed's terminal rate for the expected easing cycle dropped to a new low for this decline. For example, the one-month USD OIS, priced two to three years forward, dropped back to the early February lows and undermined the emerging view that a potential Donald Trump presidency would mean a higher Fed terminal rate.
"This softening in US short-dated rates should be negative for the dollar and positive for risk assets.
"The problem for risk assets is that geopolitical threats plus a very soft manufacturing story in Europe and Asia are hardly supporting growth-friendly currencies. Perhaps that is why the biggest beneficiaries of this softer dollar environment continue to be the Japanese yen and the Swiss franc."
8.31am: FTSE gains cut
There are some big share price rises at the top of the FTSE, but the index's gains are being trimmed, now only just four points above flat.
One factor holding it back is Lloyds, Reckitt Benckiser and RELX shares going ex-dividend.
HSBC, the third largest company on the index, is also down 2.8%, reversing its gains from earlier in the week as investors continue to mull its interim results.
Second-top of the leaderboard now is Smith & Nephew PLC (LSE:SN), up 7.7% with the replacement hip and knee specialist reporting interim results in line with forecasts, but with revenues at its key Orthopaedics arm ahead of expectations with good growth across hip and knee implants outside the US.
Analysts at Stifel say: "We believe the standout part of the quarter is S&N managed to grow Ortho by 4.9% while improving cash conversion to ~60%, and driving positive free cash flow from lower WC investment, a core issue in our view."
Other notable items included the commitment to a dividend payout of 35% to 40% of earnings from 2025 onwards.
Rolls shares are still top of the risers, up 9%.
With Next up 7.6% on the back of its better-than-expected second quarter, high street rivals M&S and Primark owner AB Foods are also among the top risers.
8.11am: FTSE 100 opens higher
The FTSE 100 has started 25 points higher, up 0.3% to 8,393 in early trades.
Rolls-Royce is the early leader, up 9.3% as it confirmed the return of shareholder distributions for this year, and upped guidance.
Clothing retailer Next is next, as its second-quarter full price sales were up 3.2% versus last year, well ahead of expectations for a small fall.
Biggest faller is Schroders PLC (LSE:SDR) after its interim results disappointed.
8.01am: More returns at Shell and LSEG
More share buybacks, this time from Shell PLC (LSE:SHEL, NYSE:SHEL), which has unveiled a US$3.5 billion (£2.7 billion) purchase plan even though profits dipped over the first half of the year on lower gas prices.
Following an identical buyback programme earlier in the year, the oil supermajor said the latest repurchase would be completed over the coming quarter.
This was as adjusted earnings slipped 19% to US$6.3 billion over the second quarter, or by 5% during the half year.
A 14% dividend increase was announced by London Stock Exchange Group PLC (LSE:LSEG), which enjoyed a cash-rich first half of 2024 that enabled it to complete a £1 billion buyback in the first half.
The capital markets and data analytics company said it is gearing up to commercialise its partnership with Microsoft in the second quarter.
7.55am: Barclays beats profit forecast
Barclays PLC (LSE:BARC) said it plans to launch a £750 million share buyback and return at least £10 billion of capital to shareholders by 2026 as reported profits above expectations and "good progress" on its three-year strategic plan.
Profit before tax for the first half of the year came to £4.2 billion, down from £4.6 billion a year ago, as second-quarter profits came in at £1.9 billion, well above the £1.6 billion average analyst forecast.
After completing a £1 billion share buyback announced its final results earlier this year, the new buyback and a dividend of 2.9p per share are planned for the first half of 2024.
Chief executive CS Venkatakrishnan said: "We completed the sale of the performing Italian mortgage book, announced the sale of the German consumer finance business, and are on track to complete the acquisition of Tesco Bank in November 2024."
7.38am: House price inflation beats expectations
House prices rose 0.3% in July compared to the previous month, seasonally adjusted data from Nationwide shows, higher than the 0.1% economists expected and follows a 0.2% gain in June.
Year-on-year growth rose to 2.1%, the largest annual increase since late 2022, up from 1.5% in June.
With the figures coming ahead of the Bank of England meeting later, Nationwide chief economist Robert Gardner said, "Investors expect Bank Rate to be lowered modestly in the years ahead, which, if correct, will help to bring down borrowing costs."
"However, the impact is likely to be fairly modest as the swap rates which underpin fixed-rate mortgage pricing already embody expectations that interest rates will decline in the years ahead."
7.27am: Rolls-Royce to bring back dividends and buybacks
Rolls-Royce Holdings PLC (LSE:RR.) has raised its outlook for the full year and is bringing back dividends and share buybacks for this year, but said supply chain issues are preventing it from growing profits even faster.
For 2024, management of the FTSE 100 engine maker now expect to generate an underlying operating profit of £2.1-2.3 billion and free cash flow between £2.1-2.2 billion, versus an average City analyst forecast of around £2 billion for both.
In the first six months of the year, the company made an underlying profit of £1.1 billion at a margin of 14.0%, with free cash flow of £1.2 billion.
Net debt was reduced to £0.8 billion, driven by net cash flow from operating activities of £1.7 billion.
In light of the improvements to profit, cash flow, "making strong progress strengthening the balance sheet and building resilience", the board said it will reinstate shareholder distributions at the time of full year results, starting with a 30% pay-out ratio of underlying profit after tax, then with an ongoing pay-out ratio of 30-40% each year.
7.13am: FTSE 100 to keep ball rolling
The FTSE 100 is predicted to keep up the good work on Thursday, as we start the new month of August, ahead of the Bank of England's policy decision later and after the US Federal Reserve left rates changed overnight.
London's blue-chip benchmark has been tipped on futures markets to extend its gains by 25 points, adding to the 93.5 advance yesterday that took the index to just under 8,368.
Last night, the Nasdaq's tech stocks powered to a 2.6% gain, with the S&P 500 up 1.6%, the Russell 2000 rising 0.5% and the Dow Jones adding 0.2%.
This still left the Nasdaq Composite index down 1.6% last month, with the S&P 500 up 0.9%, while the rotation into the Russell 2000 saw it jump over 11%.
London's FTSE rose 201 points or 2.5% over July, while the FTSE 250 added over 1,370 points or 6.8%.
This morning's company results are due from the likes of Shell, Barclays, Rolls-Royce, Next and BAE Systems, plus many more.
A decision from the Bank of England is due at midday, followed by a press conference.