- FTSE 100 closes 38 points higher
- US stocks cautiously ahead led by tech issues
- May FOMC meeting minutes due at 7.15pm GMT
4.50pm: Footsie regains 7,500
The FTSE 100 index ended firmer but off highs on Wednesday, recovering the previous session’s falls and regaining the 7,500 level supported by a cautious morning advance on Wall Street as investors awaited the release later of minutes from the May Federal Reserve Open Market Committee (FOMC) meeting.
At the close, the UK blue-chip index was 38.40 points, or 0.5% higher at 7,522.75, below the session peak of 7,546.41 but above the day's low of 7,484.35.
In New York, around London’s close, the Dow Jones Industrial Average was 26 points, or 0.1% higher at 31,955, while the broader S&P 500 index was up 0.4%, and the Nasdaq Composite rose 0.8% as tech stocks rebounded after shouldering most of the recent falls.
Craig Erlam, senior market analyst, UK & EMEA at OANDA commented: “I'm not sure what exactly investors are holding out for. A lot has changed in the markets over the last few weeks and we've had a lot of Fed commentary in that time that is arguably more relevant than almost anything we can take from the minutes.
“That said, this is nothing new and investors are always wary of what could happen. Especially when market conditions are as volatile and uncertain as they are. There is no shortage of anxiety in the markets and the minutes could potentially feed into that.”
He concluded: “We've seen interest rate expectations pare back a little in recent weeks as economic fears have become more prominent. The central bank still expects to avoid a recession, which may be referenced in the minutes, but investors are becoming less confident as the cost of living squeezes household budgets."
3.55pm: Footsie near high for the day heading into the close
Leading shares are near their highs of the day as Wall Street edges into positive territory ahead of the latest minutes from the US Federal Reserve meeting.
Heading into the close, the FTSE 100 is up 55.16 points or 0.74% at 7539.51.
Michael Hewson, chief market analyst at CMC Markets UK, said: "After yesterday’s modest falls, markets in Europe have had a more positive bias today, edging higher on a day with little in the way of drivers.
"The FTSE 100 has had a solid day, pushing up to its highest level since 5th May, while the DAX hit its lowest levels this week before rebounding back into positive territory."
Power group SSE PLC (LSE:SSE) continues to lead the way, up 5.41% as its 23% rise in full year profits outweighed the prospect of a windfall tax on energy companies.
It made a point of stating how much investment it was making to lessen the UK's dependency on imported gas.
Elswhere Imperial Brands PLC (LSE:IMB) added 3.19% after a positive note from analysts at Goldman Sachs (NYSE:GS).
But Severn Trent PLC (LSE:SVT) has - perhaps harshly - fallen 2.73% as it unveiled a £30mln fund to help customers on low incomes alongside a 7.5% rise in annual underlying profits to £508mln.
Rival water company United Utilities Group PLC (LSE:UU.) is down 1.19%.
Ocado Group PLC (LSE:OCDO) has fallen 2.38% as the company downgraded its forecast for sales growth this year from 10% to a low single digit.
2.59pm: US investors await Fed minutes
US stocks opened mixed on Wednesday as investors await the release of minutes from the Fed’s latest meeting which are expected to provide insights into the financial body’s monetary policy pathway over the coming months.
Just after the open, the Dow had shed 75 points at 31,854 points.
The S&P 500 and the Nasdaq were both steady at 3,941 points and 11,263 points respectively.
After plunging 43% yesterday, Snapchat’s parent body Snap Inc (NYSE:SNAP) had recovered some of its losses, up about 5% just after the open.
Back in the UK the FTSE 100 is up 39.31 points or 0.53% at 7523.67.
2.40pm: Sterling not partying after Partygate report
The publication of the Sue Gray report into Partygate does not look like being the end of it, with speculation as to whether enough Tory MPs will decide to call a vote of no confidence in Boris Johnson.
The political uncertainty has seen the pound edge lower against the dollar, dipping 0.2% to US$1.2516.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: ‘’The pound pile on has continued with sterling coming under even more pressure as political uncertainties have landed on top of economic worries, following a damning report into the Partygate scandal.
"The probe by senior civil servant Sue Gray has engulfed the UK government in a fiercer storm of criticism, as she pointed the finger of blame at the leadership for allowing a party culture to develop as the country was in lockdown and millions of citizens were in isolation. As traders speculated over just how untenable Boris Johnson’s position as Prime Minister is, sterling fell further against the dollar and the euro before making up some ground...
"By taking full responsibility there is speculation that Mr Johnson could still evade being ousted and a close eye will be kept on the number of letters from MPs calling for his resignation.
"Already the pound had been on the slide over fears about the fragility of the UK economy following much weaker than expected data showing a marked slowdown in business activity. This has led to expectation that the Bank of England will be forced to ease off on the accelerator when it comes to higher interest rates with the market now expecting fewer hikes. That is in contrast to the expected path of regular, although not extreme, higher hikes from the US Federal Reserve and comes as a new hawkish attitude has appeared at the European central bank, trends which are adding more strength to both the dollar and the euro.’’
1.28pm: Oil on the rise again
Oil is heading higher amid supply concerns, on the expectation that an EU embargo on Russian crude is closer to agreement, while the demand from the US is set to grow.
Brent crude is up 1.04% at US$114.74 a barrel, increasing for the fifth session in a row, while West Texas Intermediate has added 1.21% to US$111.1.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown said: "The creeping up of supply worries came after the head of the European Commission Ursula von der Leyen said she hoped to secure the crude ban within days.
"It comes as demand for oil is expected to rise in the coming weeks as the so-called driving season in the US kicks off with the Memorial Day long weekend, when millions of Americans are set to release pent-up demand for travelling and head on trips over the summer.’’
12.04pm: Stock exchange's news service suffers a glitch
Early birds wanting their daily fix of company news at 7am were left rather puzzled this morning.
The pickings were rather slim with an unusually small number of announcements, and nothing from the likes of Marks and Spencer Group PLC (LSE:MKS) or SSE PLC (LSE:SSE) which were timetabled to report.
In fact a glitch in the system meant many announcements from the regulatory news service of the London Stock Exchange Group PLC (LSE:LSEG) were delayed, hence the confusion.
And in a rising market, the stock exchange's shares are down 0.85%.
11.50am: US investors edgy over central bank moves amid stagflation fears
US markets are expected to open mixed ahead of the release of the minutes from the US Federal Open Market Committee’s most recent meeting, which will provide more context to the Fed’s decision to hike interest rates by 50 basis points, the biggest increase in 22 years.
Futures for the Dow Jones Industrial Average declined 0.03% in Wednesday pre-market trading, while those for the broader S&P 500 index gained 0.06% and the Nasdaq added 0.14%.
Naeem Aslam, chief market analyst at Avatrade.com, said traders are hesitant to place any significant bids ahead of the FOMC minutes.
“Traders know that central banks around the globe are playing a catch-up game with inflation, and they are trying their best to front-load as much as they can to bring inflation lower while keeping close tabs on economic numbers,” Aslam commented. “There is fear among investors and traders that policymakers may make another significant mistake if they continue to adopt a steep tightening phase as stagflation is sitting on the doorstep.”
US markets also ended mixed on Tuesday after spending the vast majority of the day underwater. The Dow turned around to closed 0.15% higher at 31,929. The Nasdaq, meanwhile, tumbled 2.35%, to 11,264 and the S&P 500 32 dropped 0.81% to 3,941.
Snap Inc (NYSE:SNAP) the parent company of social media platform Snapchat, plunged 43% after it slashed its forecast amid rising inflation and interest rates, and supply chain and labor challenges.
After last week’s disappointing retail earnings, Snap’s profit warning has reiterated the impact of inflationary pressures on corporate bottom lines, sparking concern among investors.
“Nasdaq is the stock index which continues to remain under significant selling pressure as the outlook from tech companies continues to push the index price lower,” Aslam continued. “For instance, investors are losing faith in social media companies and their advertisement revenue after the drama about Snap's earnings results. All major platforms, Meta, Snap and Twitter, have their own challenging situations, and it doesn't seem like their pain will go away anytime soon.”
Back in the UK, the FTSE 100 seems unconcerned at the moment, up 41.21 points or 0.55% at 7525.56.
11.39am: Pets at Home leads the mid-cap risers
The FTSE 250 mid-cap index is also in positive territory, up 0.3% at 19,908.9.
Leading the way is Pets at Home Group PLC (LSE:PETS), up 9.26% following its latest figures which showed underlying profits ahead of expectations at £144.7mln.
Matt Britzman, equity analyst at Hargreaves Lansdown, said: "The strong performance and balance sheet with net cash mean investors are being rewarded with a £50mln buyback as pet ownership shows little sign of slowing down...
"Inflationary pressures are lingering in the background, but Pets at Home looks relatively resilient in face of those challenges with a large portion of goods sourced locally and costs initiatives in place easing the pressures."
Elsewhere SSP Group plc (LSE:SSPG) has climbed 6.72% as chief executive Patrick Coveney bought £1.6mln worth of shares in the wake of Tuesday's results.
10.37am: Power and tobacco companies climb
Defensive stocks are in demand as the leading index holds on to some - although not all - of its early gains.
The FTSE 100 is currently up 32.09 points or 0.43% at 7516.44, having earlier hit 7537.
Power company SSE PLC (LSE:SSE) continued to lead the way, up 4.67% following its results.
Imperial Brands PLC (LSE:IMB) is up 3.05% to 1839.5p after analysts at Goldman Sachs (NYSE:GS) moved from neutral to buy with a price target raised from 1750p to 2150p.
The same analysts helped lift British American Tobacco PLC (LSE:BATS) by 2.52% to 3576.5p after they issued a buy note with a target of 4000p, up from 3800p.
Close behind are mining group Anglo American PLC (LSE:AAL), which has added 1.93%, and Vodafone Group PLC (LSE:VOD), up 1.89%.
Russ Mould, investment director at AJ Bell, said:" The FTSE 100 advanced 0.4% to 7,516, led by utilities, telecoms and mining stocks – all generous dividend payers, suggesting that people are continuing to rediscover their love of income investments.”
But the latest update from Ocado Group PLC (LSE:OCDO) has seen its shares fall 4.5%.
9.37am: Confidence in markets falls in May
Investors have lost confidence in global markets amid the cost of living crisis and economic uncertainty, according to a new survey.
Market sentiment fell 21% on average between April and May, as measured by the Hargreaves Lansdown investor confidence index.
Confidence in European markets fell the most, unsurprisingly given the invasion of Ukraine, losing 25%. UK confidence was almost as bad, down 24%.
Emma Wall, head of investment analysis and research at Hargreaves Lansdown, said: “Investor confidence in global markets has fallen more than 20% on average, as HL clients struggle to make sense of market volatility and the continued uncertain outlook.
"The ongoing tragedy of the war in Ukraine, rising inflation, and the corresponding central bank policy reaction have added risk to equity markets, and turned clients off investing. These figures come just a few weeks after a market-wide survey from Opinium which showed nearly one in five have stopped investing due to lost capital.
"The bad news is market volatility is unlikely to improve any time soon. Inflation is set to hit double digits in the UK, and is rising steadily across the globe thanks to supply chain issues. This is forcing central banks to up interest rates in a bid to control rising prices – but not so far that policy makers tip the economy into recession.
"This tightrope walk is not a beneficial backdrop to equity valuation stability. Investors should try to focus on the long term, and ignore daily movements if they can."
9.16am: Ocado and Marks under pressure
A notable faller in the blue chip index is Ocado Group PLC (LSE:OCDO).
Its shares ares down 4.16% after it issued a trading update to coincide with full year results from partner Marks and Spencer Group PLC (LSE:MKS).
Ocado said that since an update in March, the trading environment for Ocado Retail had deteriorated "with the cost of living crisis compounding the impact of a return to more normal consumer behaviours as restrictions have ended and many people return to the office."
So it warned that with pressure on household spending intensifying, its retail sales growth in 2022 would be in low single digits rather than the expected 10%.
Meanwhile Marks' shares are down 1.97% after a mixed picture from its results.
It unveiled a full year profit of £391.7mln after the previous year's loss of £209.4mln.
But it warned that it started the current year from a lower profit base and did not expect to progress from this during the year.
Richard Hunter, head of markets at interactive investor, said “There is much to like about these numbers from M&S, but there is also much to do before the company can regain its previous status and profit levels...
"For all the progress, the share price has been held back by any number of factors and given the outlook comments this could continue to be the case.
"Quite apart from the effects of declining real incomes as inflation persists, M&S has highlighted some headwinds which will result in a lower profit base for the current year.
"These include further investment in Ocado retail capacity, the lack of any income from Russia following its withdrawal and the absence of any business rates relief. This is despite a strong first six weeks of the new financial year which has seen further growth in both the food and clothing and home units.
8.18am: Footsie makes positive start
Leading shares have made a positive start, helped by Wall Street recovering from its worst levels ahead of the publication of the latest US Federal Reserve minutes.
The FTSE 100 has climbed 44.32 points or 0.59% to 7528.67 in early dealings.
Meanwhile the government is reportedly planning to act - belately - on the cost of living crisis.
A multi-billion pound plan is apparently being drawn up today by the prime minister and chancellor to help struggling households with an announcement expected tomorrow.
That would be a day after the infamous Sue Gray report on Partygate is due to be published, but that has to be a coincidence surely and not an attempted distraction.
The much mooted windfall tax on energy companies could make an appearance, marking yet another U-turn by those supposedly running the country.
That would follow comments from Ofgem chief executive Jonathan Brearley who told MPs yesterday that the energy price cap is expected to surge by another £830 in October to £2,800, putting even more pressure on households already struggling with the latest increase in bills.
Meanwhile shares in power company SSE PLC (LSE:SSE), which fell sharply on Tuesday on talk of the windfall tax, are up 4.32% after it reported a 23% jump in full year pretax profits to £1.164bn.
In a possible defence against criticism, it said it planned to invest heavily to reduce dependency on imported gas.
Chief executive Alistair Phillips-Davies said: "In the context of a global energy crisis and intense pressure on the cost of living, we are helping to drive the build-out of vital electricity infrastructure that will reduce dependency on imported gas and help protect consumers from future price spikes, and in doing so we are investing significantly more than we are making in profits."
Back with central banks, and the Reserve Bank of New Zealand raised its official rate to 2% as expected, but its accompanying statement was more hawkish than anticipated.
6.50am: Investors holding their nerves
The FTSE 100 is tipped to open around 60 points higher as investors appear to be holding their nerves.
CFD firm IG sees London’s blue-chip benchmark up 65 points, making a price of 7,549 to 7,553 with just over an hour to go until the start of trading.
It comes after a choppy US session which last night ended in mixed fashion ahead of Federal Reserve minutes that will later today recap this month's not-so-bad-as-feared interest rate decision.
“Fed chair Jay Powell said that based on current data, that the Fed had no intention of going faster than 50 bps in a single month, burying any imminent prospect that the Fed would be much more aggressive in subsequent months, a narrative that has shifted somewhat in the past couple of weeks,” said Michael Hewson, analyst at CMC Markets.
“At the time he specifically made the point that a 75bps hike wasn’t something the FOMC was actively considering, although in subsequent comments since then he’s being careful not to rule it out entirely.”
On Wall Street, the Dow Jones finished Tuesday 48 points, or 0.15%, higher at 31,928 whilst the S&P 500 closed down 0.8% at 3,941. The Nasdaq, however, fell 2.35% as the tech sector continued to digest the profit warning of social media darling Snap Inc (NYSE:SNAP).
The Russell 2,000 small cap index similarly was down 1.56% at 1,764.
In Asia, Japan’s Nikkei was up only very slightly at 26,749 whilst Hong Kong’s Hang Seng was 0.1% higher at 20,136. Elsewhere, the Shanghai Composite was stronger, rising 0.7% to 3,092.
Around the markets
The pound: US$1.2531, down 0.008%
Gold: US$1,859 per ounce, down 0.43%
Silver: US$22.01 per ounce, down 0.56%
Brent crude: US$114.80 per barrel, up 1.4%
WTI crude: US$110.96, up 0.68%
Bitcoin: US$29,968, up 2.14%
Ethereum: US$1,995, up 0.65%