Investors on tenterhooks ahead of US rate meeting / Image Source: Adobe

Stocks mostly rose on Wednesday morning in London despite the UK economy stalling, amid news that what would have been the largest IPO in the UK so far in 2024 collapsing.

The FTSE 100 index opened up 55.24 points, 0.7%, at 8,203.05. The FTSE 250 was up 84.20 points, 0.4%, at 20,351.05, and the AIM All-Share was up 2.37 points, 0.3%, at 783.88.

The Cboe UK 100 was up 0.8% at 817.56, the Cboe UK 250 was up 0.3% at 17,801.92, and the Cboe Small Companies was down 0.1% at 16,762.57.

In European equities on Wednesday, the CAC 40 in Paris was up 0.4%, while the DAX 40 in Frankfurt was up 0.7%.

The UK economy stalled in April, in line with market expectations, according to data from the Office for National Statistics on Wednesday.

UK gross domestic product was flat in April from March, in line with FXStreet-cited market consensus. In March from February, GDP had increased by 0.4%, according to revised data from the ONS.

“The market had low expectations for the UK economy in April, and it duly delivered,‘ said Nicholas Hyett, investment manager at Wealth Club.

‘Economic growth was flat, held back by a third month in a row of contraction in the construction industry and weakness in the manufacturing sector.’

There was also some bad news for the UK industrial sector.

The ONS reported that industrial production fell by 0.9% on-month in April, worse than expectations of a 0.1% fall. Production had risen by 0.2% in March from February.

On an annual basis, industrial production fell by 0.4% in April, having risen by 0.5% the month earlier.

Investors do not have long to dwell on the UK data, though, with attention quickly turning to the latest US Federal Reserve interest rate decision, and inflation data.

The Federal Reserve is expected to maintain interest rates at the current level once again, and the focus Wednesday will be on what it reveals in its latest projections, with the prospect of a hat-trick of cuts this year all but over. The decision will be announced at 1900 BST.

Before then, there is inflation data from the US to digest. It is due out at 1330 BST.

According to FXStreet, the annual rate of consumer price inflation is expected to have remained unmoved at 3.4% in May, where it stood in April. The annual rate of core inflation is expected to have ebbed to 3.5% from 3.6%.

‘These numbers are nowhere near the Fed‘s 2% target and are not trending sufficiently fast toward that level, but a surprise to the downside could fuel the Fed cut bets for later this year,’ said Ipek Ozkardeskaya at Swissquote Bank.

The pound was quoted at $1.2748 early on Wednesday in London, higher compared to $1.2722 at the equities close on Tuesday. The euro stood at $1.0745, higher against $1.0727. Against the yen, the dollar was trading at JP¥157.30, higher compared to JP¥157.26.

In the FTSE 100, Rentokil jumped 13% to the top of the index.

Bloomberg reported that Nelson Peltz’s Trian Fund Management has amassed a significant stake in the pest control and hygiene firm.

The investor is now a top 10 stakeholder in Rentokil.

On the other hand, Legal & General lost 3.3%.

Legal & General announced a £200 million share buyback, in its ‘first step of plan to increase returns to shareholders.’

It explained that it plans to return more to shareholders over 2024 to 2027, through a combination of dividends and buybacks.

The company eyes 2% dividend per share growth each year and ‘further similar buybacks.’

In the FTSE 250, Molten Ventures jumped 11%.

The venture capital firm reported that its pretax loss narrowed to £49.8 million in the year ended March 31 from £246.7 million a year earlier.

‘This has been a productive year for Molten. We’ve continued to enhance our innovative platform to capture the exceptional investment opportunities available in backing high growth, disruptive, UK and European technology firms. The underlying performance of our portfolio companies remain strong, with valuations continuing to stabilise as the macroeconomic environment shows signs of improvement,’ said CEO Martin Davis.

Safestore lost 2.4%.

The Hertfordshire, England-based self-storage provider reported that in the six months ended April 30, revenue fell 0.8% to £109.2 million from £110.1 million a year earlier. Pretax profit climbed 68% to £173.7 million from £103.4 million.

Safestore upped its interim dividend by 1.0% to 10.0p from 9.9p.

In other company news, Special Opportunities REIT said it had to cancel its planned initial public offering on the London Stock Exchange.

The real estate investment trust said that despite ‘strong’ investor demand, it failed to meet the £250 million minimum fundraise required for the IPO to proceed.

On May 29, the company had said it targeted a fundraise of £500 million, which would have been London’s biggest IPO so far in 2024.

‘The management team will now acquire assets from the pipeline using private capital in line with the company’s proposed strategy,’ Special Opportunities said.

In Asia on Wednesday, the Nikkei 225 index in Tokyo was down 0.7%. In China, the Shanghai Composite was up 0.3%, while the Hang Seng index in Hong Kong was down 1.3%. The S&P/ASX 200 in Sydney closed down 0.5%.

In the US on Tuesday, Wall Street ended mixed. The Dow Jones Industrial Average closed down 0.3%, whilst the S&P 500 closed up 0.3% and the Nasdaq Composite up 0.9%.

Brent oil was quoted at $82.34 a barrel early in London on Wednesday, up from $81.74 late Tuesday. Gold was quoted at $2,312.00 an ounce, down against $2,312.47.

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Issue Date: 12 Jun 2024