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FTSE 100 closes a shade higher as traders await interest rate decisions

Footsie finished up around ten points at 7,490. FTSE 250 added 50 points to stand at 21,483

Traders
The Bank of England's rate decision will be closely watched on Thursday
  • FTSE 100 closes up 10 points

  • Wall Streets shares up

  • US rate decision due at 7.15pm

5pm: FTSE closes higher

FTSE 100 index closed to the good on Wednesday but it was a fairly uninspired trading day as markets survey developments in the coronavirus crisis.

Investors are also not making any major moves ahead of the US Fed and Bank of England's upcoming  interest rate decision.

In terms of the UK, swap markets are currently pricing in a 50/50 chance of a cut, down from 70% last week, so this is primed to be one of the closest decisions we have seen in recent years.

Footsie finished up around ten points at 7,490.  FTSE 250 added 50 points, to stand at 21,483. 

"The trading session has been lacklustre as traders are only too aware of the deepening coronavirus situation, but sentiment hasn’t moved a whole lot in either direction," said analyst David Madden, at CMC Markets.

"If yesterday’s positive move was down to a combination of short covering and bargain hunting, the muted session today might be a sign that buyers are running out of steam."

On Wall Street, stocks gained as a clutch of strong earnings reports outweighed virus fears, with the Dow Jones Industrial Average adding over 100 points, and the S&P 500 advancing around 11 points.

3.35pm: FTSE 100 subdued into late-afternoon; Northern rail to be renationalised

Into the final hour of Wednesday’s session, the FTSE 100 was still positive but had made little headway and was up 14 points at 7,494 shortly before 3.30pm.

Premier Inn owner Whitbread PLC (LON:WTB) was leading the blue-chip risers, up 2.8% at 4,473p following an upgrade from HSBC, while NMC Health PLC (LON:NMC) was the biggest faller, down 3.3% at 1,337.5p.

In other news, troubled UK rail franchise Northern Rail will be renationalised from 1 March, following widespread criticism over cancellations as well as a litany of issues including delays to infrastructure upgrades and trade union disputes.

The decision to end the franchise of Deutsche-Bahn-owned Arriva, which has operated the line since 2016, marks the second time in less than two years that the government has had to step in to replace a failing franchise, the previous instance being the taking over of the east coast line from Virgin Trains in 2018.

2.40pm: US markets open higher

As expected, Wall Street began Wednesday’s session on the front foot as optimism around corporate earnings allayed concerns over the coronavirus and hesitation ahead of the Fed’s interest rate decision.

Shortly after the opening bell, the Dow Jones Industrial Average rose 0.7% to 28,921, while the S&P 500 climbed 0.4% to 3,289 and the Nasdaq was up 0.5% to 9,316.

The positive start didn’t seem to provide much extra momentum for the FTSE 100, which was up 15 points at 7,496 shortly before 2.40pm.

1.40pm: Wall Street to edge higher as corporate earnings overshadow coronavirus fears; Fed eyed

The US markets are expected to start higher on Wednesday as optimism around corporate earnings seemed to overshadow fears around the spread of the coronavirus.

Apple Inc’s (NASDAQ:AAPL) record-breaking first quarter earnings overnight are likely to boost sentiment as well as strong numbers from Starbucks Corp (NASDAQ:SBUX) and General Electric Co (NYSE:GE).

However, some traders may be keeping their powder dry ahead of the Federal Reserve’s interest rate decision later today, although the central bank is widely expected to keep rates as they are.

In London, the FTSE 100 was 15 points higher at 7,496 in mid-afternoon.

11.45am: FTSE 100 higher as lunchtime approaches, UK house prices tick upwards

Heading into lunchtime, the FTSE 100 had picked up a little steam from its modest start and was up nearly 24 points at 7,497 shortly before 11.45am.

The blue-chips were led by venture capital firm 3i Group plc (LON:III), which was 2.5% higher at 1,126p, followed by iron miner Evraz PLC (LON:EVR), up 2.3% at 375.1p, and B&Q owner Kingfisher plc (LON:KGF) which rose 2.7% to 210p.

Leading the fallers meanwhile was NMC Health PLC (LON:NMC), down 2.6% at 1,346.6p, followed by Guinness owner Diageo PLC (LON:DGE) which fell 1.6% to 3,095.5p.

Elsewhere, there was some good news for the UK’s property market, with Nationwide’s latest report showing that house prices rose 0.5% month-on-month and 1.9% year-on-year (YOY) in January compared to 1.4% YOY growth in December.

The figures may lend some credence to the argument that the recent Conservative election victory and clarity around Brexit may have released some pent up demand in the market, with Samuel Tombs, chief UK economist at Pantheon, saying that indicators of demand at the start of the buying process were currently “red hot”.

Meanwhile, EY ITEM Club’s Howard Archer said there was “compelling evidence that the housing market has had an initial leg-up from increased optimism and reduced uncertainties” following the election result.

However, he added that despite a near-term boost he was “relatively cautious over housing market prospects for 2020” and predicted that upside will be limited, particularly with Brexit concerns potentially picking up again later in the year as trade negotiations between the UK and EU progress.

10.25am: Apple market cap surpasses value of entire DAX index

Following a share price bounce following its record first quarter numbers, Apple Inc-s (NASDAQ:AAPL) market cap has surpassed that of the DAX, an index containing the 30 biggest companies listed on the Frankfurt Stock Exchange.

The German index, which includes companies such as Deutsche Bank, carmaker BMW and airline Lufthansa, carries a market cap of around US$1.36trn, while Apple following its recent surge is now worth around US$1.39trn.

READ: Apple sees quarterly sales and profits top expectations as iPhone sales rose for first time in a year

Apple’s rise means it is now the most valuable tech company in the world and the second-most valuable firm overall, beaten out only by the Saudi state-owned oil titan Aramco which has a market cap of around US$2trn.

In its results, released after Tuesday’s close, Apple reported revenues of US$91.8bn, its highest quarterly number ever, beating out analyst estimates by more than US$4bn.

Back in London, the FTSE 100 was moving mostly sideways, up 7 points at 7,488 shortly before 10.30am.

9.45am: IAG dips as BA suspends flights to China

Shares in the owner of British Airways, International Consolidated Airlines Group SA (LON:IAG), dipped slightly in mid-morning following news that BA has suspended its flights to China amid the ongoing coronavirus epidemic.

The airline is the first major carrier to suspend flights to the country in the wake of the outbreak, which so far has infected around 6,000 people and killed more than 130.

BA said it had made the move following advice from the UK Foreign Office that British citizens should avoid all but essential travel to China to reduce the chances of infection.

Shares in IAG were 0.1% lower 590.4p shortly after 9.30am. (Read more on this story here.)

Seeing better fortunes in early trading were the bookmakers, with William Hill PLC (LON:WMH) rising 1.5% to 178p after HSBC upgraded the FTSE 250 firm to ‘buy’ from ‘hold’ and hiked its target price to 230p from 185p.

Ladbrokes owner GVC Holdings PLC (LON:GVC) also climbed 1% to 898p after HSBC upped its target to 1,150p from 1,070p and retained its ‘buy’ rating.

Meanwhile, the FTSE 100 was just about in positive territory, up 9 points to 7,490 at around 9.45am.

8.30am: Modest early gains

The FTSE 100 started on the front foot on Wednesday as the markets took a sanguine view of the possible coronavirus pandemic.

The index of UK blue-chips opened 12 points higher at  7,492.30 

But it was a fairly dull start to proceedings and traders are expected to keep their powder dry ahead of the US Federal Reserve’s monthly rate-setting confab.

“In terms of the Fed meeting today, the key thing we’re looking for today relate to balance sheet expansion – anything that suggests the free money taps could be turned off may expose riskier assets,” said Neil Wilson, senior analyst at Markets.com.

“Markets are accustomed to the Fed riding to the rescue and using monetary policy to create an easy path higher for stocks,” he added.

Among the early risers, Whitbread (LON:WTB) added 1.3% after HSBC upgraded the hotelier to ‘buy’.

HBSC was also active in the trains sector. Its upgrade to ‘hold’ on FirstGroup (LON:FGP) was met with a collective ‘meh’. Its downgrade to ‘reduce’ of Stagecoach (LON:SCG), however, was greeted with a 2.6% markdown.

Delving into the small-caps, Polarean Imaging (LON:POLX) was an early riser after success with two phase III clinical trials. The stock rose 14%.

Proactive news headlines:

Tremor International Ltd (LON:TRMR) said it is confident in its outlook for 2020 following a “transformational” 2019 which saw its merger with RythmOne. In a trading update for the year ended 31 December, the video advertising firm said it is expecting to report adjusted earnings (EBITDA) of US$60mln, in line with expectations, with revenues of around US$325mln.

Polarean Imaging PLC (LON:POLX) said two phase III clinical trials have “validated the belief” that its technology allows doctors and surgeons to visualise aspects of lung function that have gone undetected using traditional magnetic resonances imaging (MRI) techniques. And it does so in a way that was both safe and allowed for quantitative analysis of the area of the lung being examined, it added. Polarean has developed a drug-device combination that uses hyperpolarised 129-Xenon gas and MRI.

Shanta Gold Limited (LON:SHG) has unveiled a new mineral resource estimate for the Singida project in central Tanzania, adding 194,000 additional ounces of gold. The new estimate gives Singida 919,000 ounces, grading 2.25 grams per tonne, which represents an improvement of around 725,000 ounces.

Ergomed PLC (LON:ERGO) said it expects its underlying earnings to exceed market forecasts and added that momentum seen in 2019 had continued into the current year. The company noted that its order book currently stands at £125mln as at December 31, up 15% year-on-year, which bodes well for 2020.

Minds + Machines Group Limited (LON:MMX) has said it will announce a maiden dividend with its results for 2019 following strong trading for the year. In a trading update, the provider of internet top-level domains (TLDs) said revenue for the year just gone was expected to be “significantly ahead” of 2018, adding that the quality of revenue had continued to improve in line with its strategy of decreasing reliance on one-off brokered sales.

APQ Global Limited (LON:APQ) has beefed up its corporate services and administration offering in the Channel Islands with the acquisition of Parish Group by the emerging markets fund manager for £2.7mln. Parish provides a full range of fiduciary and corporate services from offices in Guernsey and Alderney and has customers in over 30 jurisdictions, including Israel, South Africa, the United Arab Emirates and Qatar.

Anglo Pacific Group PLC (LON:APF) told investors that it has agreed a US$30mln increase in its revolving credit facility (RCF), and, has extended the facilities expiry by twelve months. As a result, the natural resources royalties firm said, it now has some US$90mln available in the RCF, and, it retains the possibility that the lending facility could increase up to US$120mln - if an accordion feature is implemented.

Bango PLC (LON:BGO), the mobile commerce company, said it will deliver a Strategy Day presentation in London for investors and analysts on Wednesday afternoon. The group said the presentations, at which no new material trading or financial information will be disclosed, will be made available on the company’s Bangoinvestor.com website.

Eckoh PLC (LON:ECK), the global provider of secure payment products and customer contact solutions, said it has received notification that, on 28 January 2020, Todd Funk, its senior executive vice president of US Operations, sold a total of 350,000 ordinary shares in the company at a price of 58p each.

Salt Lake Potash Limited (LON:SO4) (ASX:SO4) said that at General Meeting of the company, held on Wednesday, all the resolutions voted on were carried by way of a poll.

6.35am: Footsie called higher

The FTSE 100 is expected to open higher on Wednesday as markets continue to shrug off fears over the coronavirus impact ahead of a Federal Reserve meeting later today.

Spread-better IG expects the FTSE 100 to open around 19 points higher after ending Tuesday’s session up 69 points at 7,481.

Unlike the keenly anticipated meeting of the Bank of England on Thursday, the Fed’s meeting today is expected to be a much duller affair.

No change in Fed policy is anticipated “for the foreseeable future”, says Capital Economics, after three rate cuts last year.

AJ Bell’s Russ Mould is similarly expectant that the Fed will hold its fire, citing a CME Fedwatch survey that currently puts the likelihood of ‘no change’ at 87%, although they are simultaneously estimating a 75% probability that the Fed will cut rates at least once this year.

All eyes will be on Powell’s press conference following the meeting to see if there is any new information.

“We expect to see very little changes to the broad economic assessment in the upcoming FOMC statement and expect chair Powell to continue to push a strong ‘on hold’ bias with regards to broad interest rate policy in his press conference,” said economists at RBC Capital Markets in a Fed preview.

The current stance is fairly certain to be unchanged, Deutsche Bank said, barring a “material reassessment to the outlook”.

Wall Street was driven higher overnight as fears over the viral outbreak in China began to ease, with the Dow Jones Industrials Average closing up 0.66% at 28,722 while the S&P 500 climbed 1% to 3,276 and the Nasdaq rose 1.4% to 9,269.

A standout performer after the US close was tech giant Apple Inc (NASDAQ:AAPL), which saw its shares move higher in after-market trading after it delivered record earnings for its first quarter.

In Asia, the Japanese Nikkei 225 was up 0.7%, while Hong Kong’s Hang Seng slumped 2.6% as traders returned from an extended Lunar New Year holiday amid concerns over the spread of the coronavirus in the city.

On currency markets, the pound was slightly sluggish against the dollar, down 0.02% at US$1.3024, as investors sat of their hands ahead of Thursday’s Bank of England meeting.

Significant announcements expected on Wednesday:

Interims: Hargreaves Services Plc (LON:HSP)

Trading announcements: Wizz Air Holdings PLC (LON:WIZZ), Fresnillo Plc (LON:FRES)

Economic announcements: Federal Reserve policy decision, UK house prices

Around the markets:

  • Sterling: US$1.3024, down 0.02%
  • Brent crude: US$59.47, up 1.1%
  • Gold: US$1,566.59 an ounce, down 0.1%
  • Bitcoin: US$9,371, up 4.2%

City headlines:

  • Apple posted a record quarterly profit last night that beat forecasts and extended a rally in its shares, boosted by strong iPhone sales – Times
  • The Trump administration on Tuesday called Boris Johnson’s decision to use Huawei’s equipment in parts of Britain’s fifth-generation mobile phone networks “disappointing” – Financial Times
  • Administrator Link Fund Solutions confirmed on Tuesday that thousands of investors in Neil Woodford’s former flagship fund will lose more than half their money – Telegraph
  • The departing boss of Sainsbury's, Mike Coupe, has denied that his exit was prompted by the botched merger with Asda as he said it was 'absolutely' his choice to leave the supermarket – Daily Mail
  • Index Ventures and Accel, Deliveroo’s earliest backers, have accused the UK regulator of jeopardising investment in British start-ups by launching a probe of its deal with Amazon – FT
  • Airbus has agreed to pay €3.6 billion in fines and penalties to Britain, France and America after settling claims against it of bribery and corruption – Times

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