- FTSE 100 up 14 points to 10,508
- UK CPI inflation remained at 2.8%
- Pound falls as no BoE hikes expected
5.15pm: Fed decision eyed
London stocks finished the day just slightly higher, with the FTSE 100 up 14 points at 10,508 as investors awaited the first Fed decision under new chairman Kevin Warsh.
“A new chief means markets face a degree of uncertainty for US monetary policy, and as a result the rally from last week continues to cool. Warsh’s enthusiasm for lower rates would normally be thought of as firmly positive, but his keenness on shrinking the Fed’s balance sheet casts a longer shadow,” IG chief market analyst Chris Beauchamp said.
“The US-Iran deal has given the new boy a big boost ahead of his first appearance, as a more convincing tale of falling energy prices can now be told, but even with this expectation there is more than an air of anticipation this afternoon.”
4.07pm: BAT for Maga
The benefits of political donations 101.
British American Tobacco’s US arm gave $18 million to Trump-supporting Maga Inc, according to a story from the Times today.
The donation "came before rules on flavoured vapes and nicotine pouches were eased", the report notes.
Could they be linked? Could American (and UK politics to a similar but with smaller sums invvolved) be built on lobbying and donations?
Quite possibly.
3.33pm: Oil creeping up
Oil prices have crept higher today and Brent crude is currently back up above $80 a barrel, having been below $78 just after the open.
In the background, or should it be foreground, Donald Trump has been speaking at the G7 Summit.
Asked whether the Iran deal will be signed Friday: "You never know with deals," he said.
He said Iran's leadership "want to make a deal".
"If they don't, the process will start again."
2.55pm: Positive start on Wall Street despite tech wobble
Wall Street has opened in a more positive mood.
The Dow Jones has pressed on to a new all-time high, up 193 points or 0.4% to 52,193, while the S&P 500 is up 0.1%.
Caterpillar, Goldman Sachs and JPMorgan are leading the Dow.
The Nasdaq is up less than 0.2%, having started higher but cooling off.
SpaceX took off initially, rising another 5% to over $212, but now looks to be heading into the red.
Alphabet, Microsoft, Amazon and Meta are all down over 1% too.
1.55pm: FTSE underlying picture
The FTSE is still just below flat, but the underlying movements are a little different from early trading this morning.
Consumer-facing names are struggling, with Marks & Spencer at the bottom of the table, nursing a 3.4% fall, joined by St James's Place, Rightmove and J Sainsbury.
Against that, the resources complex is still dragging, with Rio Tinto and Glencore among the biggest fallers, while Shell and BP are also lower.
At the other end, banks are doing the heavy lifting, with Barclays up 2.5% and Standard Chartered, Lloyds and NatWest all higher, while HSBC's near-1% gain is providing valuable index ballast as the index's largest company.
12.52pm: Fed meeting keeping a lid on markets
The Footsie flirted with dry land for a short while as midday came and went, but we're back below water again.
It's a similar picture across mainland Europe, where only France's CAC is slightly in the black.
The pan-continental Euro Stoxx 600 is up 0.4%, led by healthcare names, including Novo Nordisk (NYSE:NVO) and Swiss dentistry giant Straumann.
Otherwise, internet and tech gains such as for Auto1, Zalando and ASM International point to a broader risk-on tone.
US futures are mixed, with the Dow Jones expected to echo its old-world cousin and open just below flat, while the more tech-forwards Nasdaq is being called up 0.5%.
Investors seem "reluctant to take much of a view following weakness for most of Wall Street last night, and ahead of tonight’s Federal Reserve monetary policy meeting", says market analyst David Morrison at Trade Nation.
It's the first for new Fed chair Kevin Wash and comes amidst some speculation, following recent comments from the man himself, that he might prefer a less transparent approach from the US central bank.
"He doesn’t like the running commentary from Fed members, and it’s thought that he may ditch the ‘dot plot’, the quarterly chart which shows FOMC members’ forecasts for the Fed Funds rate for the rest of this year and beyond," notes Morrison.
As this Fed meeting is a quarterly get-together, it will be accompanied by the release of the FOMC’s Summary of Economic Projections (SEP), of which the 'dot plot' is one element.
The SEP includes all individual FOMC members' forecasts for GDP, unemployment, inflation and the Fed Funds rate for the rest of this year, and beyond.
Investors are relatively chilled about this meeting, as rate cuts are seen as completely off the table for this year, according to the CME FedWatch tool.
Morrison notes that there’s a 40% probability of ‘no change’ and a 60% likelihood of at least one rate cut before the year-end.
Yesterday's session on Wall Street was mixed, with a rotation out of high-flying technology names and into cyclical sectors.
The Dow Jones rose 329 points or 0.6%, to close just shy of 52,000 after touching a fresh intraday high earlier in the session.
The Nasdaq lost almost 2% while the S&P fell 0.9%, led by some sharp declines across semiconductor stocks, and tech more generally.
"The Dow continues to get a lift through some market rotation, whereby funds that come out of the growthy tech sector tend to be redirected into stocks perceived as offering better value," says Morrison.
"In fact, a look at Caterpillar’s stock price proves that investors don’t have to load up on tech to get results. Caterpillar hit a fresh all-time high yesterday, having gained over 270% since April last year."
Middle East and Ukraine rebuilding contracts anyone?
11.37am: Iran deal exceeds expectations
G7 leaders have hailed the US-Iran deal and issued a joint statement calling for an "immediate ceasefire" in Lebanon.
A meeting was held this morning in France between leaders of Canada, France, Germany, Italy, Japan, the UK and US, as the final details of a deal struck between Washington and Tehran are ironed out, with signing mooted for Friday.
In a statement, they said: "We welcome the announcement of a deal between the United States and Iran, secured under the strong leadership of President Trump, with the support of mediating countries, which provides an historic opportunity to prevent Iran from acquiring any nuclear weapon and tackling the threats related to its regional and ballistic activities. We support and are ready to contribute to its implementation.”
The US-Iran deal is thought to include the immediate lifting of the US naval blockade on Iranian ports and the reopening of the Strait of Hormuz.
An initiative led by the UK and France can help to reopen the Strait to maritime traffic, the G7 statement added, but also warned that further negotiations were needed "to address the threats posed by Iran in the region and beyond".
Canadian PM Mark Carney told media that he has seen a copy of the draft memorandum of understanding and "it’s exceeded my expectations".
He told CNN the deal "sets the groundwork to ensure Iran doesn’t have a nuclear weapon. The Rubicon, if I can use that metaphor, has been crossed."
11.19am: FTSE still under water, SpaceX unstoppable right now
The FTSE is continuing to wallow in the shallow water, dragged down by its heavy weighting of commodities and utilities sectors.
Slim pickings in terms of UK company news, but many investors on this side of the Atlantic will be checking the price of SpaceX.
Last night the rocket company gained 4.8% to $201.8, putting its market cap above Amazon at almost $2.7 trillion (Amazon made profits of $78 billion last year from revenue of over $740 billion, while SpaceX lost $5 billion on revenue of around $18 billion).
"Can anything stop SpaceX?" wonders market analyst Neil Wilson at Saxo. "The selling in the afternoon looked like the buyers had run out for the day and profits were taken."
This morning, the shares are up 3.3% at $208.42 in pre-market trade.
"Right now there are a lot of forced buyers," says Wilson. "Soon enough there will be a lot of willing sellers. We are in the price discovery phase, but it’s unevenly distributed right now.
"SpaceX will be included in FTSE Russell, MSCI and Nasdaq indices in the coming days.
"When the lockup periods expire we move from a forced-buyer dynamic to a willing-seller dynamic. Nothing can defy the laws of gravity forever, but 'don't stop me now' might be a good refrain for SPCX until that moment comes."
There's not a huge amount happening in the London corporate diary today, meaning many in the City will be looking at other screens in a day of England sporting performance, with Thomas Tuchel's boys opening their World Cup account tonight and the second Test match against New Zealand soon to begin at the Oval. (England won the toss and will bowl.)
10.37am: Movers
Caledonia Investments (LSE:CLDN, VFEX:CMCL) shares are up 7% after two bits of news. First, the investment trust has agreed to invest around £60 million in 54-site garden centre operator Blue Diamond, taking a minority stake of roughly 16%.
The investment includes up to £20 million to give existing shareholders the chance to cash out, plus a framework to invest up to £40 million of further capital over the next five years to support acquisitions and estate investment.
And second is a separate LSE filing that revealed stake-building by an individual investor, Neil Partington, who has acquired 4.6 million shares, equivalent to a 3.54% stake in the business.
AO World shares rose almost 4% in early trading before falling over 3% now.
House broker Peel Hunt said results came in just ahead of guidance.
"Given FCF is building at £40-60 million per annum, we expect enhanced returns to remain a feature. We leave forecasts unchanged as AO continues to build market share in major domestic appliances and other categories, with a raft of initiatives in train."
Oxford Metrics (AIM:OMG), the smart sensing and measurement technology group, fell as much as 8% this morning on the back of interim results.
The group is also holding an investor event today to set out a three-year plan to double revenue, lift recurring and repeatable income to around 25% of sales, and push adjusted operating margins into the mid-teens.
9.45am: Hays sells overseas offices
Hays shares rose 7% in initial trading after the recruiter said it had sold six European businesses and is eyeing options for seven others around the world, including China.
The FTSE 250 group has completed the sale of its businesses in the Czech Republic, Denmark, Hungary, Luxembourg, Romania and Sweden for net cash proceeds of about £4 million, which is expected to result in a modest non-cash loss in the second half.
Hays said the six businesses primarily provided specialist recruitment services to local customers.
Management are exploring potential sales of seven more overseas operations as part of the ongoing review of its international footprint, namely Belgium, Brazil, Greater China, Malaysia, the Netherlands, Singapore and the UAE.
8.50am: Markets still cautious
The FTSE 100 is down 17 points and the picture across European stock benchmarks is mixed, tending to flat.
Germany's DAX is down 0.4%, while in Milan the FTSE MIB is down 0.2%, with Paris and Madrid indices largely unmoved.
The collapse in the oil price "has changed the tone of global markets, supporting bonds and reducing near-term inflation pressure", says market analyst Patrick Munnelly at Tickmill.
"But it has not produced a clean equity rally because AI valuations remain under scrutiny and central banks are not ready to fully reverse their caution."
Today’s Federal Reserve meeting is less about the rate decision (no move is expected) and more about new chief Kevin Warsh’s framework, Munnelly adds.
Back home, softer inflation gives BoE governor Andrew Bailey "more room to wait".
"The oil move is the central macro development. Brent below $79/bbl is a major shift from the conflict-driven highs and materially reduces the near-term pressure on headline inflation.
"But the market is still not fully back to the pre-conflict world. The Strait of Hormuz deal lowers tail risk and should eventually improve supply, yet operational normalisation still depends on security verification, insurance repricing and the rebuilding of commercial shipping confidence. For now, the inflation relief is real, but central banks will be cautious about extrapolating too far."
8.15am: FTSE searching for direction, oil and miners weigh
The FTSE 100 initially opened a few points higher, seeming to defy futures market predictions, but has dipped slightly below the waterline.
Utilities, tobacco, oil companies and miners are the anvil around the index's neck this morning, with National Grid and Vodafone leading the fallers, with BAT, BP, Rio Tinto and Shell not far behind.
This is offsetting rises from defence and aerospace companies, led by Rolls-Royce for a second day, and a fall in the pound on the back of the encouraging inflation data.
In opening trades, London's blue-chip index inched up around six points, but is now down almost four at 10,490.5.
7.59am: AO and PZ
It's mid and small caps reporting today, with AO World looking like one of the picks of the bunch as it unveiled plans to return £20 million to shareholders after strong cash generation turned its balance sheet from red to black.
The online electricals retailer's adjusted profit before tax increased 16.1% to a record £50.5 million and it ended the year with net funds of £16.4 million, compared with net debt of £35.9 million a year earlier.
Elsewhere, PZ Cussons (LSE:PZC) has slightly upgraded its profit expectations after continued strong trading across all four of its lead markets.
The owner of consumer goods brands including Imperial Leather and Carex, said it expects like-for-like revenue growth of about 6% for the year to 31 May, with reported revenue of about £540 million.
Adjusted operating profit is now expected to be at, or slightly above, the upper end of its previous guidance range of £53 million-£57 million.
7.35am: BoE rates 'to remain flat' after CPI reading
Some economists' thoughts on the CPI figures and what the implications are for the Bank of England meeting tomorrow.
Thomas Pugh at RSM UK says: "Unexpectedly steady inflation in May eliminates any lingering chance of a rate hike tomorrow and will go a long way to taking a hike in July off the table as well.
"More importantly, the tentative deal between the US and Iran and the recent sharp drop in oil prices means fuel prices will start to fall back from here. There will still be a wave of inflation coming through supply chains that will push inflation to a peak of around 3.5% later this year, but the risk of inflation breaching 4% has declined substantially."
He notes that a sharp drop in food and beverage price inflation from 3.0% in April to 2.2% in May as well in as alcohol and tobacco (2.8% to 2.4%) helped to offset the expected big swing in airfares (-13.2% to 0.9%), while there was also some weakness in prices of retail goods such as clothing and furniture, as well as in hospitality services like restaurants and hotels, which suggests that the broad trend of disinflation was still occurring in May.
"Looking ahead," says Pugh, "inflation will stay around current levels for a few months before jumping higher in July when the utility price cap resets.
"We think it will then rise a little further over the rest of the year as the supply chain impacts of previously higher oil prices, higher agricultural prices and second-round effects start to be reflected in consumer prices. However, the sharp drop back in oil prices combined with a weak labour market, slowing pay growth and tight financial conditions means the risks of second-round effects are much lower than in previous energy crisis."
Rob Wood at Pantheon Macroeconomics notes that "a stronger signal about underlying inflation pressure from services inflation jumping to 3.7% in May, from 3.2% in April", which was above consensus although still below the BoE's 3.9% forecast from April.
He says: "The inflation figures will support the MPC’s highly likely decision to keep Bank Rate on hold this week and make a July hike less likely.
"Granted, there will be another CPI as well as other economic releases before the July decision, but the drop in oil prices after the US-Iran agreed an extended ceasefire had in any case led us to remove our forecast for a rate hike."
He now expects the BoE's monetary policy committee to hold rates through to the end of 2027, though still expects inflation to accelerate in the coming months as supply chain pressures feed through to goods, while energy utilities’ contribution to inflation will rise. "We look for inflation to peak at 3.4% in November, down from 3.6% before the deal."
FTSE 100 pre-open
London's blue-chip stocks have been called lower on Wednesday, despite UK inflation for last month coming in lower than expected and oil prices falling to new three-month lows.
FTSE 100 futures were down around 20 points, following a day when the index gained almost 63 points to close at 10,494.21.
Inflation figures from the Office for National Statistics show the consumer price index rose only 0.2% month-on-month in May, down from 0.7% the previous month and below the 0.4% the market predicted.
The annual rate of CPI inflation remained at 2.8%, not rising to 3.0% as forecast.
Separately, with a ceasefire deal between the US and Iran seemingly almost agreed, Brent crude oil fell to just above $78 a barrel in the early hours, the lowest since early March when US and Israel's strikes began.
Asian stock markets are mostly positive this morning, though Chinese and Hong Kong benchmarks are in the red.
US futures are green, with the Nasdaq called around 0.7% higher but those for the Dow Jones only just above flat.
