London skyline
FTSE gets a boost from Manufacturing data / Image source: Adobe

Stock prices in London fell at midday on Tuesday, as investors nervously looked ahead to interest interest rate decisions from the US Federal Reserve and Bank of England.

Amongst individual stocks, Unilever was boosted by cost saving plans. Oil prices also gave BP and Shell a boost.

The FTSE 100 index was down 20.42 points, 0.3%, at 7,702.13. The FTSE 250 was down 76.27 points, 0.4%, at 19,410.26, and the AIM All-Share was down 1.31 points, 0.2%, at 735.32.

The Cboe UK 100 was down 0.3% at 771.13, the Cboe UK 250 was down 0.5% at 16,824.10, and the Cboe Small Companies was up 0.2% at 14,801.63.

In European equities on Tuesday, the CAC 40 in Paris was up 0.1%, while the DAX 40 in Frankfurt was up marginally.

Stocks in New York were called lower. The Dow Jones Industrial Average was called down 0.2%, the S&P 500 index down 0.4%, and the Nasdaq Composite down 0.5%.

‘European markets were flat and future prices imply a lacklustre session from the US when its markets open later on. Investors are likely to be sitting on their hands until the Fed unveils its latest interest rate decision tomorrow. A rate cut looks unlikely at this meeting so the big focus will be on economic projections and how many rate cuts we might see later in the year,’ AJ Bell’s Russ Mould.

The US Federal Reserve will announce its interest rate decision on Wednesday. The Bank of England will follow on Thursday. Both are expected to keep interest rates unchanged.

Equities in Japan got a boost on Tuesday, after markets saw the first interest rate hike in 17 years. Japan’s Nikkei 225 closed up 0.7%.

The Japanese central bank said it judged that its monetary easing policy and yield curve control programme have ‘fulfilled their roles’. It raised its short-term policy rate to a range of 0.0% to 0.1%, from minus 0.1% previously. The move marks the BoJ’s first interest rate hike in 17 years, as the central bank becomes the world’s last to end negative rates.

The pound was quoted at $1.2691 at midday on Tuesday in London, lower compared to $1.2722 at the equities close on Monday. The euro stood at $1.0849, down against $1.0877.

Against the yen, the dollar was trading at JP¥150.42, higher compared to JP¥149.12.

In the FTSE 100, Unilever rose 3.0%, after it said it plans to spin off its ice cream business and cut 7,500 jobs as it picks up the pace of its reorganisation plans.

The owner of Marmite, Dove soaps and Domestos announced the move alongside proposals to accelerate its ‘growth action plan’.

Unilever intends to launch a comprehensive productivity programme which it anticipated will deliver total cost savings of around €800 million over the next three years, more than offsetting estimated operational dis-synergies from spinning off the ice cream business.

The changes are expected to impact around 7,500 jobs, with total restructuring costs now anticipated to be around 1.2% of group turnover for the next three years, up from around 1% of turnover previously guided.

Unilever, which owns five of the top 10 selling global ice cream brands including Wall’s, Magnum and Ben & Jerry’s, said the separation of ice cream will assist in the implementation of the GAP.

Oil firms were also higher, on the back of higher oil prices. BP rose 0.5% and Shell edged up 0.4%.

Brent oil was quoted at $86.79 a barrel at midday in London on Tuesday, up from $86.27 late Monday.

In the FTSE 250, Crest Nicholson fell 8.6%, after it warned it could face a £15 million charge after uncovering defects in some legacy projects.

The Surrey, England-based housebuilder said the issues related to four sites that were completed prior to 2019 when the group closed its regeneration and London divisions.

Crest Nicholson said these sites will require remediation over the next three years at an estimated cost of up to £15 million.

Close Brothers rose 8.0%.

Close Brothers announced plans to bolster its financial position as it grapples with the uncertainties of the probe into commission payments in the UK motor finance industry.

The merchant bank said, combined with the decision to not pay any dividend payments in the current financial year, its proposals could strengthen the group’s available CET1 capital by around £400 million by the end of 2025.

PureTech jumped 7.9%.

The Boston, Massachusetts-based biotherapeutics company said it plans to return $100 million to shareholders with a tender offer, starting after it publishes its annual report in April.

‘We are delighted to be able to purchase shares of PureTech at this valuation and to concurrently provide some liquidity to our shareholders and additional capital returns,’ said Chief Executive Officer Daphne Zohar. ‘Following this proposed tender offer, we are confident that our strong balance sheet will continue to support the development of our existing pipeline - as well as the next wave of innovative medicines.

Gold was quoted at $2,155.06 an ounce on Tuesday at midday, lower against $2,158.93 late Monday.

Still to come on Tuesday’s economic calendar, there is US building permits data at 1230 GMT.

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Issue Date: 19 Mar 2024