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FTSE 100 above 7000, FTSE 250 hits new high, but Wall Street mixed

The UK's leading index holds on to the day's gains as travel and leisure stocks gain ground

markets
  • FTSE 100 adds 20 points
  • US stocks seek direction
  • Barclays bounces after results

5:10pm: FTSE 100 retains daily gains as US markets ready for Federal Reserve committee announcement

The FTSE 100 finished the day holding in the green up 20.5 points or 0.29% to close at 7,016.63.  After reaching a year-to-date high of 7,136.10 last month, the index briefly dipped below the 7,000 threshold last week, before climbing back. 

Across the pond concern is mounting ahead of the Federal Open Market Committee (FOMC) meeting later today. 

As Chris Beauchamp, Chief Market Analyst at IG explained in a market note, the meeting is “unlikely to be particularly exciting”, however there may be some initial talks regarding the process of tapering off asset purchases. 

“The chorus of bears that never seems to quiet despite the plethora of record highs across stock markets will no doubt declare tapering will be the event that finally unhinges the great bull market of 2009-2021, but this is not 2013,” wrote Beauchamp. 

“The Fed and markets have been here before, and while the chairman of the Fed may have changed a couple of times since then the FOMC is much more accomplished in communicating the details of the taper, when it arrives, and so a market selloff purely on the mention of the ‘T word’ is unlikely.”

4.16pm: IAG and Rolls among the risers

Heading into the close and the FTSE 100 is keeping things steady.

The leading index is up 23.78 points or 0.34%, helped by a spate of positive results and the latest relaxation of quarantine rules.

The top two risers are both benefiting from a postive reaction to their figures, with precious metals miner Fresnillo PLC (LSE:FRES) up 6.55% and wealth management group St James's Place (LSE:STJ) 4.28% better.

But it was not all good news for companies reporting results, with ITV PLC (LSE:ITV) down 2.68% as it skipped an interim dividend and BAT PLC falling 1.05%.

Reckitt Benckiser, which disappointed the market on Tuesday, continues to decline, down 3.19%.

The end of quarantine for fully vaccinated travellers into the UK has given a boost to British Airways owner International Consolidated Airlines PLC, up 2.76%.

Aero engine maker Rolls-Royce PLC has climbed 2.92% for the same reason.

Michael Hewson, chief market analyst at CMC Markets UK, said: "It’s been a much more positive session for markets in Europe today, boosted by some decent earnings reports across a range of sectors.

"Travel and leisure stocks are once again enjoying a decent session, helping to pull the FTSE 100 back above the 7,000 level, with IAG and easyJet among the gainers after it was confirmed that the UK will exempt fully vaccinated travellers from the EU and US from quarantining from August 2nd. Rolls Royce is also higher ahead of its own H1 update which is due next week.

"With Covid cases also falling here in the UK, down for seven days in a row, there is increasing optimism that we could see a late summer rush of bookings as we head towards the autumn."

As for the mid-cap FTSE 250, it is on course for a record close,, up 149.82 points or 0.65% at 23,026.83. The number to beat is 23,022.4.

3.40pm: Mid-cap index in demand

The mid-cap FTSE 250 has hit a new intraday peak and could reach a new closing high by the time the market shuts.

It is currently up 139 points or 0.61% at 23,016.01.

Earlier it touched a record 23,094 but would need to end the day above 23,022 to set a new closing high.

The domestically focused index has been lifted by the easing of lockdown restrictions and, today in particular, by hopes that the easing of quarantine regulations for passengers will boost airlines and travel companies.

So Wizz Air Holdings (AIM:WIZZ) PLC, helped by an upbeat trading statement, is up 7.19%, EasyJet has climbed 4.64% and TUI AG (LSE:TUI) is up 2.22%.

SSP PLC, whose Upper Crust and Ritazza brands are big in train stations and airports, is up 6.45% while Trainline PLC (LSE:TRN, FRA:2T9A) is 5.55% better.

The index has also been boosted by a spate of bid activity including Ultra Electronics (LSE:ULE) PLC, up 1.4% amid a potential takeover by Cobham, owned by US private equity group Advent.

Supermarket group Wm Morrison Supermarkets PLC, up 0.19%, is also in the takeover spotlight.

Back with the FTSE 100 and the leading index is up 20.40 points or 0.29% at 7016.48.

On Wall Street the S&P 500 and Nasdaq Composite have held on to their gains but the Dow Jones Industrial Average has edged down 31 points ahead of the latest Federal Reserve comments.

2.41pm: Wall Street opens in the green

The main indices on Wall Street managed to open mostly higher on Wednesday as investor anxiously awaited the outcome of the Fed’s meeting.

Shortly after the opening bell, the Dow Jones Industrial Average was up 0.06% at 35,077 while the S&P 500 climbed 0.1% to 4,405 and the Nasdaq rose 0.43% to 14,723.

Back in London, the FTSE 100 was inching higher in late afternoon and was up 18 points at 7,014 at around 2.40pm

2.17pm: Shares drift ahead of central bank comments

Leading shares have drifted back a little but are still above the 7000 level.

The FTSE 100 is up 9.59 points or 0.14% at 7005.67 ahead of the US open and the Federal Reserve meeting.

On Wall Street the three main indices have edged higher now, with the Dow Jones Industrial Average called up 19 points or 0.04%, the S&P 500 0.09% higher and the Nasdaq Composite 0.37% better.

Craig Erlam, senior market analyst at OANDA Europe, said: "[The Fed meeting is] being hyped up so much, I can't help but feel it's going to be a huge anticlimax. Given how the data is performing - talk of peak recovery - the believed transitory nature of the inflation numbers and the surge in Covid cases as the next wave takes hold, it seems highly likely that the Fed is going to kick the can down the road.

"Unless policy makers are starting to question the transitory nature of the inflation data we're seeing, there seems little reason to risk a taper tantrum in the markets when solid progress is being made. Clearly it's coming soon but the Fed can afford to act with caution. The question is whether they will signal when it is likely, if not in the coming months and how investors will take it."

Back in the UK and one of the biggest fallers is Reckitt Benckiser PLC, down another 2.05% or 117p at 5583p in the wake of Tuesday's disappointing figures.

12.32pm: US investors uncertain ahead of Fed

Wall Street looks like it is playing things cautiously ahead of the outcome of the latest Federal Reserve meeting.

As well as continuing concerns about inflation - which could either be eased or exacerbated by the Fed's comments later - investors are worried about the rising number of Delta variant cases and the repercussions of China's latest clampdown on tech and other private sector businesses.

On the plus side are the growing signs of economic recovery as evidenced by a number of upbeat second quarter statements from major companies.

So the Dow Jones Industrial Average is set to open down 43 points or 0.14%, while the S&P 500 is virtually flat and the Nasdaq Composite is indicated up 0.24%.

The record profit announced by Google parent Alphabet after the market closed on Tuesday seem to have been well received, with its shares up 3.9% in pretrading.

But Apple has lost nearly 1% after it hinted that its rate of growth could slow.

Pfizer (NYSE:PFE) meanwhile has slipped 0.59% despite just now reporting results ahead of expectations.

 

 

After the bell tonight a number of big names are reporting, including Facebook, Ford and PayPal (NASDAQ:PYPL).

Back in the UK and the FTSE 100 is up 15.51 points or 0.22% at 7011.59.

12.14pm: Pharma group upbeat

GlaxoSmithKline PLC (LSE:GSK) shares are moving higher after the pharmaceuticals and consumer products group beat forecasts for its second quarter results.

The company, under pressure from an activist investor and planning to spin off its consumer business, said revenues rose 6% to £8.09bn while operating profits jump 23% to £2.15bn.

 

Chief executive Emma Walmsley said: "GSK delivered an excellent performance in Q2.  We expect this positive momentum to continue through the second half of the year driving us towards the better end of our earnings guidance range for 2021, and meaningful performance improvement in 2022.  We continue to strengthen our pipeline and are advancing well towards separation.  Our clear priority is to focus on execution, unlocking the value of Consumer Healthcare and delivering the step-change in growth and performance we now see for GSK."

Glaxo shares are up 1.74% at 1423.6p.

The FTSE 100 meanwhile is 18.76 points or 0.27% better at 7014.84.

11.54am: SSP and WH Smith benefit from travel hopes

Also lifted along with the travel stocks is SSP Group plc (LSE:SSPG), up 15.5p or 6.13% to 268.2p.

The company, which runs the Upper Crust and Ritazza brands and Haven at Olso Airport, has been hit hard by the fact that for months no one has been travelling.

But the prospect of some restrictions being eased and travel getting back to more normal levels has given it a boost.

By the same token WH Smith PLC (LSE:SMWH), which is widely represented in train stations and airports, is also on the rise, up 34p or 2.04% at 1700p.

Meanwhile the FTSE 100 has drifted away from its best levels.

It is now up 12.27 points or 0.18% at 7008.35 having earlier risen as high as 7021.

11.10am:Quarantine reports lift travel stocks

Airlines and other travel shares are on the rise after reports that the UK government could ease some quarantine restrictions.

British Airways owner International Consolidated Airlines PLC is up 45 at 182.34p, EasyJet PLC is 4.83% better at 890.4p and Wizz Air Holdings (AIM:WIZZ) PLC - which also issued a positive update - has added 6.07% to 4942p.

Bus and train operator FirstGroup (LSE:FGP) PLC has accelerated 4.51% to 88.05p and Trainline PLC (LSE:TRN, FRA:2T9A) has put on 3.92% to 344.6p.

Joshua Mahony, senior market analyst at IG, said: "Plans for the UK to allow double-jabbed visitors from the EU and US without the need to quarantine marks a welcome albeit belated boost for the travel and tourism sector. With summer in full swing, the airlines will hope that this measure drives a swift and sharp rise in bookings as they aim to make up for an incredibly tough period.

"Meanwhile, the growing incentivisation of vaccines should also drive higher engagement from otherwise unwilling cohorts of the population, with young people more likely to get vaccinated if it means they can benefit from greater freedoms."

Overall the FTSE 100 is up 22.84 points or 0.33% at 7018.92.

10.46am: Robinhood poised to float

The meme stock frenzy caused much excitement among investors recently, so the listing of one of the key players due on Thursday is guaranteed to attract attention.

Trading platform Robinhood is set to join Nasdaq at what could be a hefty US$35bn valuation. But it is not without its controversies.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: ‘’There is likely to be huge interest in Robinhood’s IPO, given the swirling speculation about the company on social media forums and the media coverage the company received as it became a central figure in the GameStop craze earlier in the year.

"The company was set up to help further democratise investing in the US and draw more ordinary traders into the Wall Street world. If the stock does list within the range of US$38 - US$42 per share, this will turn out to be a US$35bn idea. But the company has come under the regulatory spotlight and that could have a big impact on the company’s future potential as an investment.

"The app has come under fire for the so called ‘gamification’ of investing with the use of rewards and celebratory notifications to encourage users to trade more. Its strategy is paying off with the number of accounts increasing to 18 million by March this year from 7.2 million in March 2020.

"The way that Robinhood makes money has also come under intense scrutiny. Instead of charging investors a dealing commission, it puts clients' trades through certain companies, and in return, these companies pay Robinhood a fee. It’s these charges, called “payment for order flow” that make the company most of its money...

"But this model is now under review, with the US regulator, the Securities and Exchange Commission (SEC) planning to look again at the stock market trading rules, which could include payment for order flow...

"And there could be more storms gathering on the horizon. The Robinhood prospectus named seven US state and federal bodies investigating the company. All this could add up to potential issues down the line, so investors need to take such risks into the equation when they consider investing right from the start of Robinhood’s listed life.

"If Robinhood can bat away these issues, or if the SEC decides not to change the current rule book, the groundswell of support among day traders the company has already gathered could potentially accelerate, leading to further growth for the company.’’

10.25am: Markets mark time

Leading shares are holding on to the 7000 level, but there is a sense of marking time ahead of the outcome of the latest US Federal Reserve meeting this evening.

The FTSE 100 is currently up 13.25 points or 0.19% at 7009.3, with little impact from the upbeat results overnight from a number of tech giants.

Danni Hewson, financial analyst at AJ Bell, said: "It says a lot when a big-name stock like Apple doesn’t see a share price jump on better-than-expected quarterly earnings..

“The second quarter earnings season is proving to be a mixed bag for markets, with investors looking past many impressive top line figures and digging deeper into the numbers to find anything they can to worry about.

“Microsoft also smashed expectations, yet its shares barely moved in after-hours trading as good headline news on earnings was offset by concerns about a slowdown in the rate of growth for its Azure cloud computing operations...

“All eyes will be on the US Federal Reserve which is in the middle of its two-day policy meeting. As always, investors will want to know the central bank’s latest view on the outlook for the US economy and whether it is time to tinker with policy support measures.

“The spread of the Delta virus variant in recent weeks and months could give the Fed reason to make no changes to its policy, but any sign of taking a more forward-looking view and wanting to taper bond purchases could cause ripples across global markets.”

Positive results from a number of big name UK companies are helping keep the index in the green.

Barclays PLC (LSE:BARC) is 3.74% better after the bank said half year profits had jumped from £1.3bn to £5bn and it intended to boost shareholder value.

Richard Hunter, head of markets at interactive investor, said: “Barclays has opened the UK banks reporting season in some style, boosted by an improving economy and record income within its investment bank..

"The strength of the financial position has also enabled further progress on capital distributions, with an announced buyback programme of £500mln adding to the £700mln scheme completed in April. At the same time the dividend payment was doubled and, while this still implies a yield of 1.2% (pre-pandemic the shares were yielding around 9.6%), there nonetheless remains significant gas in the tank to hike payouts further."

Topping the risers at the moment is wealth management group St James's Place (LSE:STJ) PLC, up 5.94% following its figures.

 

9.46am: House prices climb 10.5% year on year

The UK housing market is still booming even though it has cooled from recent peaks.

That is the conclusion from the latest Nationwide housing survey, which showed house prices growing at an annual rate of 10.5% in July. 

This is down from the 17 year high of 13.4% seen in July but is still a hefty increase by anyone's standards.

On a monthly basis the average price edged down 0.5% to £244.229.

The figures reflect the tapering off of the Chancellor's stamp duty holiday, which is due to end completely in September.

Nicky Stevenson, managing director at national estate agent group Fine & Country, said: “While the Chancellor’s tax incentives have begun to taper, a pronounced dip in housing stock means that demand continues to outweigh supply, and this imbalance should continue for some time to come.

“Going forward, the market will remain buoyant though the dynamics are already starting to shift.

“While the clamour in recent times has been for bigger properties with more outdoor space, we may see luxury apartments start to come back into vogue as the drift back to the office starts to gather pace in the big cities.

“In addition, we are still awaiting the return of international buyers which we expect to happen in the autumn, something that should prove a huge boost for Prime London which has been sluggish of late.

“In the meantime, first-time buyers finally have grounds for greater optimism as they continue to pay no stamp duty on properties less than £300,000 while others are now paying much more. This means the balance may finally be shifting back in their favour when bidding on more modestly priced homes, particularly with the added firepower of first-time buyers mortgages behind them.”

The report has provided some support for the listed housebuilders.

Barratt Developments (LSE:BDEV) PLC is 1% better, Taylor Wimpey (LSE:TW.) has climbed 0.88% while Berkeley Group (LSE:BKG) Holdings PLC is up 0.44%. But Persimmon PLC (LSE:PSN) is virtually unchanged, slipping 0.04%.

Overall the FTSE 100 is continuing to climb, adding 20.55 points or 0.29% to 7016.63.

9.19am: Silver miner climbs but BHP and Rio slip

In a mixed performance for the mining sector, one company is shining brightly.

Precious metals specialist Fresnillo PLC (LSE:FRES) has put on 3.87% or 29.2p to 783.2p after its latest production report.

First half silver production rose 2.7% compared to a year ago while gold output climbed 12.3%.

Chief executive Octavio Alvídrez said: "We remain on track to meet our full year targets and our production guidance for 2021 is unchanged, though we remain vigilant around the continued evolution of the pandemic and its potential future effect on our operations, in particular the implementation of any future new work restrictions."

Elsewhere Rio Tinto PLC (LSE:RIO) has dipped 0.15% despite half year underlying earnings more than doubling to US$12.2bn.

And BHP PLC is still one of the leading fallers in the blue chip index, down 1.51%.

Overall the FTSE 100 has reversed its early loss and is back above 7000 but the move is hardly convincing, up 10.34 points or 0.15% at 7006.42.

8.39am: Markets make subdued start

The FTSE 100 made a subdued start ahead of the conclusion of the monthly meeting of the US Federal Reserve after hours on Wednesday.

The rate-setting committee’s virtual gatherings have taken on more significance in recent months against a backdrop of rising inflation as the world’s largest economy attempts to return to pre-pandemic levels.

Interest rate hikes are probably still some time off, so much of the narrative has been around tapering the monetary support that has helped keep US markets airborne.

The accompanying commentary around the two-day meeting will be picked over in detail over the next few days.

On the market here in the UK, traders were keeping their powder dry. The big movers were results-driven with wealth manager St James Place (LON:STJ) up 5% after a strong set of interims.

ITV (LON:ITV) advanced 4% after reporting a recovery in ad revenues, while Barclays (LON:BARC) saw its share price rise after reporting a strong increase in first-half profits.

On the debit side, the miners were marked down in a slow early session with BHP (LON:BLT), off 2.2%, leading the Footsie list of losers.

6.50 am: Footsie expected to open lower 

The FTSE 100 is expected to start lower as investors await the outcome of the latest meeting of the US Federal Reserve.

Spread-betters IG expect the blue-chip index to open around 20 points lower after ending Tuesday’s session down 29 points at 6,996.

While the Fed is unlikely to make any changes to the current interest rate, there will be interest in the central bank’s outlook for rest of the year and beyond, particularly how long it thinks inflation will last and any plans to wind down its bond purchasing programme.

However, the Fed is also likely to remain cautious on how the economic picture will pan out given the surge in cases of COVID-19 due to the Delta variant of the virus, which could pump the brakes on reopening plans in many states.

Caution also abounded in US markets overnight, with the Dow Jones Industrial Average closing down 0.24% at 35,058 while the S&P 500 dropped 0.47% to 4,401 and the Nasdaq fell 1.21% to 14,660.

The picture was similar in Asia this morning, with Japan’s Nikkei 225 down 1.71% while Hong Kong’s Hang Seng fell 0.24%.

On currency markets, the pound was down 0.08% against the dollar at US$1.386, although the Fed meeting alter may provide some movement catalysts depending on the outcome.

Around the markets:

Sterling: US$1.386, down 0.08%

Brent crude: US$74.80 a barrel, up 0.4%

Gold: US$1,804 an ounce, up 0.2%

Bitcoin: US$40,020, up 7.5%

6.50am: Early Markets - Asia / Australia

Stocks in the Asia-Pacific region were lower on Wednesday triggered by regulatory fears in China and Hong Kong over sectors such as technology and private education.

The Shanghai Composite in China fell 0.54% and Hong Kong’s Hang Seng index dipped 0.41% following a more than 8% decline over two days earlier this week.

In Japan, the Nikkei 225 slumped 1.67% while South Korea’s Kospi slipped 0.45%.

Shares in Australia declined, with the S&P/ASX 200 trading 0.72% lower.

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