The Bank of England’s monetary policy committee takes center stage today after its Federal Reserve counterparts last night appeared to put America on hold for less economic support from November.
Half of the 18 Fed policymakers also expect the first interest rate hike to take place in 2022. Investors will now consider comments from the Bank of England, which concludes its monetary policy meeting at noon. today.
The FTSE 100 index, meanwhile, opened higher after rebounding sharply yesterday on the back of indebted Chinese real estate company Evergrande promising to repay its debt.
The rebound of the FTSE 100 continues
The prospect of the US Federal Reserve curbing its support for the US economy raised little concern for investors today as the FTSE 100 Index posted further gains.
The Fed said last night that if progress continues broadly as expected, “a moderation in the pace of asset purchases may soon be warranted.” This likely means that the reduction will begin in November with the possibility that the process will be completed by the middle of 2022.
The Dow Jones Industrial Average closed 1% higher and the FTSE 100 index rose 0.5% or 38.27 points to 7,121.64 as sentiment continues to improve after the punches of Monday.
Fears over Chinese real estate company Evergrande sparked contagion fears earlier in the week, but those worries faded after the company signaled it was ready to honor its debt payment obligations.
The London elite are now above their start of the week level, having risen by more than 1% in their previous two sessions. The Fed’s comments have not turned the basket of apples upside down, although there now appears to be a greater chance that interest rates will rise in 2022.
It is unlikely that there will be anything dramatic on the part of the Bank of England later today, despite mounting inflationary pressures. AJ Mold chief investment officer Russ Mold said: “Both central banks need to avoid the nightmarish stagflation scenario and for both it means walking a bit of a tightrope right now.”
Copper miner Antofagasta was the biggest beneficiary of the improvement in sentiment as stocks rose 38.5p to 1,459p, just ahead of Glencore at 5.5p higher at 329.7p.
Rolls-Royce topped the lift chart, with the engine giant now rising 20% last week after sentiment towards the aerospace industry was significantly boosted by the easing of Covid travel restrictions in the UK and the United States.
Shares rose 4p to 126.2p, while GKN owner Melrose Industries improved 2.9p to 186.4p.
The Entain takeover target was the biggest loser on the FTSE 100, with shares in the owner of Ladbrokes and Coral moving further away from the £ 28 offer price filed by US firm DraftKings earlier this week. Stocks were down 3% or 68p to 2,309p.
Optimistic royal mail
Royal Mail shares were down 3.2p to 479.2p, after initially rising following its latest trade update. This is still double their level of a year ago, but down from June’s peak of over 600p when investors crammed into the stock following the boom in parcel volumes .
These favorable trends created by the pandemic appear to be continuing after President Keith Williams reported that domestic parcel volumes in the five months leading up to August had increased by 44% compared to the same period in 2019.
The group’s overall turnover increased by 8.2% over one year and by 17.7% compared to 2019.
Williams said: “We are increasingly convinced that domestic parcels are rebasing to a much higher level than before Covid and believe that we are maintaining our market share.”
Despite some upward pressure on costs, he said the Royal Mail division’s adjusted operating profit and margin are expected to be higher in the second half of the year compared to the first half.
Delivery delays impact the business of maternity clothing brand Seraphine
Seraphine, the premium maternity wear brand, said today that delivery delays during a “tough” second quarter weighed on profits.
The company, which was floating at 295 pence a share earlier this year, said first-quarter sales through July 4 had jumped. But he added that he “has experienced supply chain problems from China due to the severely delayed arrival of sea freight from late July.”
The equity issues have now been resolved, but underlying earnings for the first half of the year are expected to be around 15% lower than the previous year.
Read the full story here.
Rolls leads the FTSE 100 higher
The rally in the FTSE 100 after the China-led swing on Monday continued, with an additional 0.5% increase after gains of more than 1% in the previous two sessions.
Oanda Senior Market Jeffrey Halley said global market dynamics have highlighted the TINA effect – There is no Alternative – where stocks remain attractive due to low cash yields and government bonds.
He said: “With interest rates at the lowest in the world and largely zero, even a 2% return on a half-decent stock looks attractive.”
The FTSE 100 was 29.68 points higher at 7,113.05, led by 2% gains for Rolls-Royce and GKN owner Melrose Industries, as sentiment towards the aerospace industry continues to rise. to improve. Royal Mail also applauded 1.5% after overall revenue in the five months ending August rose 8.2% year-on-year and 17.7% from 2019.
Roofing specialist Marley confirms London’s floating plan
One of the UK’s largest roofing tile manufacturers has confirmed plans to float in London at a time when new homes are in high demand.
Marley, which was founded in the 1920s in Kent and manufactures products from five factories, plans to start trading in the main market next month. Market sources estimate the move could value the company at around £ 600million.
The company works with Jefferies, Peel Hunt and Panmure Gordon on the tank.
Read the full story here.
The bank will continue to wait for the game
The Bank of England’s monetary policy committee is expected to vote 9-0 in favor of keeping interest rates unchanged, with the City more interested in how many members want to unwind the quantitative easing program.
At the previous meeting, there had been only one voice calling for a withdrawal from massive government bond purchases.
The language used by the Bank will be closely watched, especially if the committee still believes the rise in inflation is “transient” after August figures showed the largest increase on record and prices of the energy continued to increase before winter.
Hargreaves Lansdown analyst Susannah Streeter said the Bank of England will likely continue to wait.
She said: “Members know full well that the economy needs to be weaned off the drugs of cheap money, especially to give them options to deal with any future crises and to bring inflation under control.
“But a rise in interest rates anytime soon, could tip many borrowers and take on more debt, and further dampen the recovery. Consumers were already facing higher prices in stores, but now energy hikes are to be expected as soaring gas prices lead to the collapse of smaller, cheaper suppliers.
FTSE 100 stable after Fed meeting
Investors appear to be taking advantage of the US Federal Reserve’s meeting last night, with the FTSE 100 index expected to open slightly higher after the Dow Jones Industrial Average finished up 1% last night.
CMC Markets calls on the FTSE 100 to start 20 points higher at 7103, after jumping 1.5% yesterday above what it was before Monday, when fears of contagion linked to the debt crisis of the real estate company Evergrande led to a strong sale.
Few were surprised by the Fed’s statement last night that if progress continues broadly as expected, “a moderation in the pace of asset purchases may soon be warranted.”
Unless next month’s payroll report is particularly bad, economists expect the cut to be announced in November with the possibility that the process will be completed by mid-2022.
The number of Federal Reserve members who saw the potential for a rate hike in 2022 fell from seven in June to nine yesterday, meaning the committee is also divided in a big change from the pro stance. -2023 earlier this year.