Bank of England
FTSE finishes the week up over 2.5% / Image source: Adobe

Stocks in London opened in the red on Tuesday morning, after the Bank of Japan decided to end its negative interest rate policy.

Amongst individual stocks, Unilever jumped after it announced job cuts, as well as the split off of its ice cream division.

The FTSE 100 index opened down 1.42 points at 7,721.13. The FTSE 250 was down 12.40 points, 0.1%, at 19,474.13, and the AIM All-Share was down 0.13 of a point at 736.50

The Cboe UK 100 was down 0.1% at 772.89, the Cboe UK 250 was down 0.2% at 16,885.24, and the Cboe Small Companies was down 0.1% at 14,766.46.

In European equities on Tuesday, the CAC 40 in Paris was up 0.1%, while the DAX 40 in Frankfurt was up 0.2%.

In Asia on Tuesday, the Nikkei 225 index in Tokyo closed up 0.7%.

In a long-anticipated move, the Bank of Japan ended its negative interest rate policy.

The Japanese central bank said it judged 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.

The S&P/ASX 200 in Sydney closed up 0.4%.

Australia’s central bank left its key interest rates unchanged, and it is ‘not ruling anything in or out’ in terms of future moves.

The Reserve Bank of Australia said the cash rate target will remain at 4.35% and the interest rate paid on exchange settlement balances will stay at 4.25%. The decision was expected by the market, according to FXStreet-cited consensus.

The RBA had kept its cash rate target unchanged at its February and December meetings, after enacting a 25 basis point hike in November.

Still to come this week are interest rate decision from the US Federal Reserve and Bank of England. The FOMC starts its two-day meeting on Tuesday and will announce a decision on Wednesday. The BoE will follow on Thursday.

‘The Fed is not expected to change the rates at this week‘s meeting, hence all eyes are on the dot plot with the expectation of fewer rate cuts this year than previously plotted. The Fed can’t start cutting rates when there is no reason to do so: inflation is showing signs of heating up, economic growth is above average, jobs market remains healthy and corporate earnings are robust,’ said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

In China, the Shanghai Composite closed down 0.7%, while the Hang Seng index in Hong Kong was down 1.2% in late dealings.

The pound was quoted at $1.2693 early on Tuesday in London, down compared to $1.2722 at the equities close on Monday. The euro stood at $1.0847, down against $1.0877. Against the yen, the dollar was trading at JP¥150.35, higher compared to JP¥149.12.

In the FTSE 100, Unilever jumped 5.0% to the top of the index.

Unilever announced steps to accelerate its ‘growth action plan’, through the separation of Ice Cream and the launch of a ‘major’ productivity programme. The Ice Cream arm includes brands Wall’s, Magnum and Ben & Jerry’s.

‘The board believes that Unilever should be increasingly focused on a portfolio of unmissably superior brands with strong positions in highly attractive categories that have complementary operating models. This is where the company can most effectively apply its innovation, marketing and go-to-market capabilities. Ice Cream has a very different operating model, and as a result the board has decided that the separation of Ice Cream best serves the future growth of both Ice Cream and Unilever,’ Unilever said.

Following separation, the company said it will become ‘a simpler, more focused company’, operating four groups across Beauty & Wellbeing, Personal Care, Home Care and Nutrition.

Unilever also announced plans to launch a ‘productivity programme’.

This will generate cost savings of around €800 million over the next three years, which will ‘more than’ offset operational dis-synergies from the separation of Ice Cream. The proposed changes are expected to impact around 7,500 predominantly office-based roles globally, the company said.

In the FTSE 250, Close Brothers jumped 10%.

The merchant bank reported that pretax profit in the six months ended January 31 surged to £93.8 million from £11.7 million a year earlier.

Basic earnings per share rose to 46.0p, up from 5.6p.

Yet, Close Brothers declared no dividend. In the first half of financial 2023, it paid out an interim dividend of 22.5p.

It said that this was due to the FCA review of motor finance industry.

‘The FCA’s review of the motor finance industry is ongoing and it would be premature to predict the outcome or estimate the potential impact on the group. The Board however recognises the paramount importance of preparing the group for a range of outcomes from this review. As part of this, the Board is taking a number of decisive actions to strengthen our capital position materially,’ CEO Adrian Sainsbury said.

On the other hand, Crest Nicholson fell 5.4%, after it updated markets on pre-2019 completed sites.

It explained that it has become aware of ‘certain build defects predominantly on four sites that were completed prior to 2019.’ The company said that these sites will require remediation over the next three years at an estimated cost of up to £15 million.

In the US on Monday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.2%, the S&P 500 up 0.6% and the Nasdaq Composite up 0.8%.

Brent oil was quoted at $86.77 a barrel early in London on Tuesday, up from $86.27 late Monday.

Gold was quoted at $2,153.76 an ounce, down against $2,158.93.

Still to come on Tuesday’s economic calendar, there is the eurozone and Germany ZEW economic sentiment survey at 1000 GMT.

Copyright 2024 Alliance News Ltd. All Rights Reserved.

Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account. AJ Bell logo

Issue Date: 19 Mar 2024