Stocks in London opened mixed on Wednesday, with investors awaiting the latest meeting minutes from the US Federal Reserve.
The FTSE 100 index opened up 12.16 points, 0.2%, at 7,733.68. The FTSE 250 was down 21.86 points, 0.1%, at 19,489.94, and the AIM All-Share was down 1.69 points, 0.2%, at 759.86.
The Cboe UK 100 was up 0.3% at 772.52, the Cboe UK 250 was down 0.1% at 16,956.54, and the Cboe Small Companies was up 0.2% at 14,986.45
In European equities, the CAC 40 in Paris was down 0.3%, while the DAX 40 in Frankfurt was marginally down.
Key points of focus for the day will be the Federal Open Market Committee meeting minutes, which will provide insight into the Fed’s thinking behind its decision to pause rates last month. Investors will be paying close attention for any further guidance on rate cuts.
Market expectations for at least 150 basis points of cuts this year are markedly more dovish than those of the Fed itself. The central bank’s latest quarterly dot plot showed that most officials expect rates to be in the range of 4.4% to 4.9% by the end of 2024. The federal funds rate currently stands at a 22-year high of 5.25% to 5.5%, so the dot plot is showing cuts of 100 basis points or less.
Lloyds Bank commented: ‘What was particularly noticeable about December’s Fed update was the seeming lack of any attempt to caution that market expectations of early rate drops were excessive. There had been some speculation beforehand that the Fed may see recent financial market moves as an excessive easing in financial conditions that would effectively add up to an early unwarranted easing in monetary policy. However, there was little indication in the Fed’s press statement or in Fed Chair Powell’s comments of any such concerns.’
‘Indeed, in marked contrast to the December policy updates from the Bank of England and the European Central Bank, the Fed seemed to effectively endorse market expectations.
‘Today’s minutes will provide a further indication of whether that interpretation is correct.’
Wednesday’s job openings & labour turnover survey, or JOLTS, will also provide crucial insight into the health of the US labour market. Alongside Thursday’s ADP jobs report and the weekly jobless claims, it will set the stage for the closely-watched non-farm payrolls print on Friday.
Sterling was quoted at $1.2645 early Wednesday, higher than $1.2620 at the London equities close on Tuesday. The euro traded at $1.0957, higher than $1.0955. Against the yen, the dollar was quoted at JP¥142.57, higher than JP¥141.74.
Meanwhile, the UK grocery sector had its busiest festive period since the onset of the Covid-19 pandemic four years ago, numbers from Kantar showed, while price inflation worries for consumers abated.
Kantar said grocery sales in the 12 weeks to December 24 rose 6.9% to £36.45 billion from £34.10 billion a year before. In the final four weeks of that period alone, sales totalled £13.7 billion.
Annual grocery price inflation in December eased to 6.7% from 9.1% in the four weeks to November 26. December’s figure was the tamest level since April 2022, and Kantar said it was the sharpest monthly slowdown it has ever recorded.
By UK market share, Tesco remained the largest grocer. Its share edged up to 27.6% during the recent 12 weeks from 27.5% a year before. Its sales rose 7.5% to £10.07 billion. Sainsbury’s recorded market share growth to 15.8% from 15.5%. Its sales were 9.3% higher at £5.77 billion.
Tesco and Sainsbury’s shares were up 1.3% and 1.7% respectively.
In the FTSE 100, Entain rose 2.2%, after the sports betting and gambling operator appointed Ricky Sandler, founder of activist investor Eminence Capital LP, to the Entain board as a non-executive director.
Entain also agreed to appoint an additional non-executive director ‘mutually agreeable to Eminence and the company’.
Sandler will be considered a non-independent non-executive director, and his three-year appointment is governed by a relationship agreement that limits Eminence to an 8% stake. Entain did not disclose Eminence’s current holding, so it is less than 5%.
Meanwhile, UBS cut its price target for Entain to 1,355 pence from 1,420p, although still rating it at ’buy’.
GSK gained 2.2%, after Jefferies raised the pharmaceutical maker to ’buy’ from ’hold’, raising its price target to 1,900p from 1,550p.
In the FTSE 250, Wizz Air lost 1.1%, after the Budapest-based airline said it carried 5.0 million passengers in December, up 19% from 4.2 million the year prior. Capacity for the month was 22% higher at 6.0 million seats, compared to 4.9 million seats in December 2022.
Its load factor was lowered year-on-year to 82.1% from 84.5%.
Ryanair also said it carried 12.5 million passengers in December, up 8.7% from 11.5 million in the corresponding month last year. Its load factor fell by one point to 91% from 92% the year before.
On AIM, C4X Discovery surged 50%, after the drug discovery company said it received a $11.0 million milestone payment from FTSE 100-listed pharmaceutical firm AstraZeneca, following trials of the C4X respiratory disease therapy treatment. AstraZeneca inched up 0.1%.
The payment stems from preclinical progress of C4X’s NRF2 Activator programme, an oral therapy for the treatment of inflammatory and respiratory diseases which AstraZeneca is developing following a agreement between the two in November.
In addition to a $2.0 million upfront payment, the global licencing agreement for the NRF2 Activator entitles C4X to receive up to $400.0 million in payments following preclinical, clinical development and commercial milestones. The deal also will grant C4X tiered mid-single digit royalties on future sales of the NRF2.
Getech soared 23%, after the geo-energy and green hydrogen company said it won eight new contracts worth an aggregate £1.8 million.
The deals comprise of subscriptions to Getech’s Globe platform, geoscience data and the purchase of expert consulting services. It expects to recognise £600,000 of revenue from these contracts in its 2023 earnings.
In Asia on Wednesday, financial markets in Tokyo remained closed for the New Year’s holiday. In China, the Shanghai Composite closed up 0.2%, while the Hang Seng index in Hong Kong was down 0.9%. The S&P/ASX 200 in Sydney closed down 1.4%.
In the US on Tuesday, Wall Street ended largely lower, with the Dow Jones Industrial Average up 0.1%, the S&P 500 down 0.6% and the Nasdaq Composite down 1.6%.
Gold was quoted at $2,061.36 an ounce early Wednesday, lower than $2,064.66 on Tuesday.
Brent oil was trading at $75.38 a barrel, lower than $77.75.
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