Stocks in London saw mixed fortunes at Wednesday’s market open, with the flagship FTSE 100 held back by a strong pound.
The FTSE 100 index opened down 37.16 points, 0.5%, at 7,418.08. The FTSE 250 was up 71.67 points, 0.4%, at 18,458.67, and the AIM All-Share was up 1.6 points, 0.2%, at 714.19.
The Cboe UK 100 was down 0.5% at 740.29, the Cboe UK 250 was up 0.4% at 15,998.72, and the Cboe Small Companies was down 0.1% at 13,451.73.
In European equities, the CAC 40 in Paris was down 0.1%, while the DAX 40 in Frankfurt was up 0.2%.
The pound crossed over the $1.27 mark this morning, following comments from a US central bank official, which helped to solidify expectations for interest rate cuts next year.
Sterling was quoted at $1.2706 early Wednesday, higher than $1.2689 at the London equities close on Tuesday.
The US Federal Reserve is making good progress in its fight against inflation, senior bank officials said, while voicing differing opinions on the chances of another interest rate hike. ‘I am encouraged by what we have learned in the past few weeks – something appears to be giving, and it’s the pace of the economy,’ Fed Governor Christopher Waller told a conference in Washington.
Economic data from October ‘are consistent with the kind of moderating demand and easing price pressure that will help move inflation back to two percent,’ he added.
‘Like his old boss, Jim Bullard, Waller is a born-again hawk — an erstwhile dove who changed his feathers during the post-pandemic inflation fight. If he’s satisfied that terminal is achieved, it’s a solid nod to the idea that the bar is quite high for another rate increase,’ said SPI Asset Management’s Stephen Innes.
Fellow Fed Governor Michelle Bowman told a conference in Utah that there had been ‘significant progress on bringing inflation down, so far without impairing the strength of the labor market and economic activity.’ She qualified her remarks by saying she would be willing to back another hike if ‘the incoming data indicate that progress on inflation has stalled or is insufficient.’
‘While some observers noted divergent remarks from Michelle Bowman, her comments are not as closely scrutinized. Though nominally important, Bowman doesn’t carry the same weight as a bellwether,’ Innes added.
The euro traded at $1.0989, but had crossed over the $1.10 mark slightly earlier, and was a touch higher than $1.0987. Against the yen, the dollar was quoted at JP¥147.22, down versus JP¥147.59.
Gold was quoted at $2,042.57 an ounce early Wednesday, higher than $2,037.08 on Tuesday.
Brent oil was trading at $81.61 a barrel, little changed from $81.63. The price was stabilising ahead of Thursday’s Opec+ meeting.
In the FTSE 100, Hargreaves Lansdown was up 0.7%, as it named Alison Platt as its new chair.
Platt is currently chair of Dechra Pharmaceuticals, which is undergoing an acquisition by EQT.
She is also a non-executive director at Tesco, and chair of general insurer Ageas UK. She replaces Deanna Oppenheimer, who will step down at the company’s annual general meeting next Friday, having served as chair for six years.
While Platt undergoes regulatory approval for the position, Senior Independent Director Penny James will serve as interim chair. ‘I would like to thank Deanna for her guidance and stewardship during her tenure as chair. I look forward to working with Alison who brings a wealth of experience to the board,’ said CEO Dan Olley.
In the FTSE 250, Harbour Energy rose 4.5%.
The oil and gas firm updated on its trading and production in the nine months to September. Over the period, it said production averaged 189,000 barrels of oil equivalent per day, down year-on-year from 207,000. It left full-year guidance of 185 to 195,000 boepd in place. It said revenue is estimated to be around $2.9 billion for the period.
‘We have continued to maximise the value of our UK oil and gas portfolio and to progress our diversification opportunities in Mexico, Indonesia and CCS while maintaining strong cost control and capital discipline,’ said CEO Linda Cook. She added: ‘This has enabled significant free cash flow generation and a robust balance sheet, supporting material shareholder returns over and above our base dividend.’
Among small-caps, Xaar and Halfords both plunged 19%.
Inkjet printing technology firm Xaar said its annual adjusted pretax profit will be between £2.5 and £3 million, which is ahead of board expectations. However, due to ‘challenging’ trading conditions in the second half, annual revenue is expected between £70 and £72 million, behind 2022’s £72.8 million.
It expects weaker demand to persist in the final quarter of this year and into 2024. ‘Together with delays in some customer product launches, [this] will result in lower revenue and adjusted profit in 2024 than previously anticipated,’ the firm warned.
Meanwhile, motoring retailer Halfords reported a disappointing outlook alongside its interim results.
In the half year to September 29, revenue rose 14% on-year to £873.5 million from £767.1 million, while pretax profit rose 3.3% to £19.3 million from £18.7 million. It left its interim dividend unchanged at 3 pence.
‘Trading patterns have been volatile across the first half of the year, and in the last couple of months we have seen some market softening in our discretionary big-ticket categories, which has been reflected in slower [like-for-like] sales growth,’ Halfords warned. It is ‘challenging’ to predict whether these trends will persist, the firm added. It went on to say that that annual profit is likely to be second-half weighted.
The week’s tepid trade thus far persisted on Wall Street on Tuesday, with the Dow Jones Industrial Average up 0.2%, the S&P 500 up 0.1% and the Nasdaq Composite up 0.3%.
In Asia on Wednesday, the Nikkei 225 index in Tokyo closed down 0.3%. In China, the Shanghai Composite closed down 0.6%, while the Hang Seng index in Hong Kong dropped 2.4%. The S&P/ASX 200 in Sydney closed up 0.3%.
Wednesday’s economic calendar has a German consumer price index reading at 1300 GMT, before a US gross domestic product reading at 1330 GMT. Additionally, the Organisation for Economic Co-operation & Development, OECD, will release its economic outlook for the world.
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