- FTSE 100 climbs 94 points
- Ocado falls after disappointing update
- Oil companies lifted as crude rises
4:55pm: FTSE 100 ends higher, US stocks mixed midday
The FTSE 100 finished the day on an up note, rising 94 points, or 1.3%, to 7,385, as financial stocks gained following the third consecutive rate hike from the Bank of England (BoE), while commodity shares moved higher on China stimulus hopes.
“Investors have eased back on the risk-on moves today, although the weaker pound following the BoE has helped prop up the FTSE 100,” IG chief market analyst Chris Beauchamp said.
“A more subdued atmosphere prevails across markets today, with any appetite to push the gains of the past two days weakened by central bank moves and fading hopes of progress in Ukraine negotiations,” he added.
Notably movers included shares of Cineworld Group PLC (LSE:CINE), which slipped more than 4% even as the theater group forecast a better performance this year due to pent-up demand and a greater selection of films.
3.48pm: UK market outperforms European peers
Leading shares remain in positive territory despite the Bank of England raising interest rates and continuing worries about the situation in Ukraine, and whether ceasefire talks can succeed.
The FTSE 100 is currently up 50.69 points or 0.7% at 7342.37, close to its high for the day.
But other European markets have not performed so well, with Germany's Dax down 1.07% and France's Cac off 0.42%.
The UK blue chip index has been helped by oil companies after another rise in crude prices.
Brent is now up 8.36% at US$106.21 a barrel, helping to push Shell PLC (LSE:SHEL, NYSE:SHEL) 2.44% higher and BP PLC (LSE:BP.) up 1.62%.
Michael Hewson, chief market analyst at CMC Markets UK, said: "Markets in Europe initially started the day on the front foot, taking their cues from another positive Asia session, and residual optimism over Russia, Ukraine peace talks.
"This optimism took a knock mid-morning on a statement from the Kremlin that yesterday’s reports on major progress in peace talks were “wrong”, sending the Dax and other related markets lower.
"Putting to one side that this optimism came about because of comments from Russia’s Foreign Minister Sergey Lavrov earlier this week, it pays to be sceptical about reports around peace talks. It’s becoming increasingly obvious that Russia’s interest in a negotiated agreement probably doesn’t extend beyond optics.
"Any ceasefire would require a major climbdown from one side or the other, and with their respective positions still being miles apart, and Russia still targeting civilians, an imminent de-escalation doesn’t look likely at this point.
"Despite the weakness in Europe the FTSE 100 has outperformed helped by Shell and BP due to the rebound in the oil price."
Other risers include gaming group Entain PLC (LSE:ENT), up 3.04% after a buy note from Berenberg, and precious metals miner Fresnillo PLC (LSE:FRES), 3.08% higher as the gold price rebounded.
But Ocado Group PLC (LSE:OCDO) remains the biggest faller in the leading index, down 9.39% after a disappointing update about its retail business.
A number of companies going ex-dividend also weighed on the market, including NatWest Group PLC (LSE:NWG), down 4.61%, and M&G PLC (LSE:MNG), off 4.17%.
2.52pm: P&O Ferries sacks its entire crew
Away from the markets, and there is chaos at some of Britain's ports as P&O Ferries unveils plans to sack its crew across its fleet - around 800 workers - and replace them with agency staff.
P&O said in its current state it was not a viable business.
But there appears to be a standoff, with unions advising crew not to leave their ships.
2.27pm: Uncertain start for US markets
US stocks made a mixed start, extending the volatile spell after a weaker opening, after the Federal Reserve raised interest rates on Wednesday, while investors closely monitor developments in the Ukraine war.
The Dow Jones Industrial Average was flat at 34,087, while the S&P 500 was up by 0.2%, and the Nasdaq Composite gained 0.1%.
The downward trend came after the Kremlin dismissed reports of progress in peace talks with Ukraine Thursday, Bloomberg reported.
On the corporate front, the jobless claims filed last week fell to 214,000, below the consensus of 220,000 and lower by 15,000 in the previous week.
The Philly Fed index– a key measure to evaluate regional manufacturing growth–jumped to 27.4 from 16.0, nearly doubling the consensus of 14.5.
“The leap in the Philly Fed is a big surprise, after the sharp drop in the Empire State index,” said Ian Shepherdson, chief economist, Pantheon Macroeconomics. “The jump in the headline to a four-month high is reflected in hefty increases in new orders, shipments, employment, and the workweek.”
He added that the bad news is that measures of supply chain pressures deteriorated, with unfilled orders and delivery times rising; the latter jumped 16.7 points to a 10-month high. “We don’t know yet if this a knee-jerk response to the war in Ukraine, or is a sign that China’s anti-Covid measures are triggering renewed disruptions, or both, but it is an unwelcome development either way.”
12.56pm: UK mortgage costs set to rise; savers' income... not so much
The increase in UK interest rates means mortgages will clearly be more expensive clearly, but it is not likely to benefit savers that much.
As an example, mortgage costs will rise £384 a year on £250,000, said Laura Suter, head of personal finance at AJ Bell.
She added: "The Bank of England had to balance the competing demands of runaway inflation and the cost of living crunch crippling people’s finances – and this month inflation was the winner. The news on inflation is particularly bleak, with the Bank now expecting it to hit 8% in the next three months and ‘potentially higher’ later this year. If inflation hits 8%, around 42 million* Brits will never have seen inflation as high in their adult life. The CPI measure of inflation last breached 8% in April 1991, meaning anyone under the age of 49 hasn’t seen inflation so high in their adulthood.
“The Bank’s members have reined in some of their enthusiasm for rate rises from last month, when many voted to push rates up by 0.5 percentage points rather than the standard 0.25 percentage point jump. The increase to 0.75% today means interest rates are back to where they were pre-pandemic in March 2020.
“While a lot of the factors underpinning any decision look uncertain, this isn’t the last move expected this year. Markets expect four more increases this year on top of today’s, meaning that by Christmas 2022 we’ll have a base rate of 1.75%, if the expectations are to be believed. At that level we’d be returning to the interest rates of 2008, around the time of the market crash.
“Setting aside any future increases, even the 25 percentage point increase to 0.75% today will have a big impact on many people’s finances, with mortgage rates shooting up for those on variable rates and debt getting more expensive.
“Savers will get a boost from any increase, and rates have increased by a decent amount off the back of the last two Base Rate rises. In November last year, before the rate rises in December and February, the top easy-access savings account was 0.65% and now it’s 1% -- meaning banks have passed on almost all of the past two increases. However, this is only at the top of the best buy tables – most savers will have seen little increase in their interest rates unless they’ve switched accounts. Savers will have to get savvy with their money if they want to benefit from higher rates."
12.37pm: US weekly jobless claims fall
Away from the Bank of England decision, the weekly US jobless figures have come in better than expected.
The number of Americans seeking unemployment benefit for the first time came in at 214,000 last week, compared to a forecast of 220,000.
The previous week's figure was revised up by 2,000 to 229,000.
US Initial Jobless Claims Mar 12: 214K (est 220K; prev 227K; prevR 229K)
— LiveSquawk (@LiveSquawk) March 17, 2022
US Continuing Claims Mar 5: 1419K (est 1480K; prev 1494K; prevR 1490K)
12.25pm: Bank "walking a tightrope"
Some reaction to the rate rise.
Alpesh Paleja, CBI lead economist, said: “With ongoing conflict in Ukraine pushing global commodity prices higher and exacerbating supply chain disruption, the MPC are clearly making moves to counter growing inflation. But they will be walking a tightrope in the months ahead, having to both keep price pressures in-check and manage the impact of tighter monetary policy on economic growth – particularly against a background of rising living costs."
Victoria Scholar, head of investment at interactive investor said: “With inflation running hot and the latest GDP figures for January also coming in strong, higher interest rates were a no-brainer, until the Ukraine war broke out which significantly complicates the picture. Conflict between Russia and Ukraine, heightening the energy price shock, have exacerbated the inflationary backdrop but have also dampened the economic outlook. While we are yet to see the GDP figures reflecting the period since the onset of war, consumer confidence is already deteriorating and will lead to slower growth down the line, while inflation is likely to push higher for longer, possibly peaking later this year rather than next quarter. While the Bank of England is ahead of the pack as the first mover, it is still behind the curve, prompting serious concerns about the prospect of a recession or stagflation. The central bank has the unenviable task of attempting to control supply side inflation with demand side tools, without inadvertently creating a recession.”
Dr Jackie Mulligan, member of the Government’s High Streets Task Force and founder of the local shopping platform, ShopAppy, said:: “In theory, the Bank of England is doing the right thing by raising interest rates to control inflation, but equally doing it now when so many people and small businesses are already on the breadline and struggling to make ends meet feels like it is out of touch. People's spending power has already been obliterated and the last thing we need for local high streets is customers and businesses having to deal with higher borrowing costs. For many small high street businesses already crippled with debt from the pandemic, rising interest rates could spell the end."
Dean Turner,eEconomist at UBS Global Wealth Management, said: “The minutes highlight the ongoing inflationary pressures facing the UK economy and the tight labour market. Given this backdrop, we expect the Bank to hike rates again at its next meeting in May, taking base rates to the 1% mark.
"As things stand, there is a risk that they may go beyond this, with further increases in the second half of the year. However, the effect of any changes to rates will not be felt on the economy for a number of months, and will do little to reverse surging energy prices which will have a greater bearing on the economic outlook for now.
"Sterling has been under pressure since the outbreak of the war in Ukraine, which has seen it tumble to the low 1.30s against the US dollar. In our view, with the Bank of England likely to deliver further hikes in the coming months, we expect sterling to recover as the year progresses and still look for the pound to finish the year higher than where it currently sits.”
12.10pm: FTSE 100 higher but pound slips
In the wake of the Bank decision to raise rates, leading shares have regained some momentum.
The FTSE 100 is currently up 33.07 points or 0.45% at 7324.75.
The pound however has slipped back on confirmation of the move.
Against the dollar it has dipped 0.23% at US$1.3107 while it is down 0.4245% against the euro at €1.187.
12.07pm: Majority of Bank committee voted for increase
The Bank voted by a majority of 8-1 to increase rates, with one member - Sir Jon Cunliffe - preferring to hold it at 0.5%.
It now expects Inflation to rise from the current 5.5% to around 8% in the second quarter of 2022, and perhaps even higher later this year when the energy price cap is likely to be raised further.
It condemned the "unprovoked invasion" of Ukraine by Russia.
On the effects of the attack, it said: "The invasion of Ukraine by Russia has led to further large increases in energy and other commodity prices including food prices. It is also likely to exacerbate global supply chain disruptions, and has increased the uncertainty around the economic outlook significantly. Global inflationary pressures will strengthen considerably further over coming months, while growth in economies that are net energy importers, including the United Kingdom, is likely to slow."
Explaining its decision to raise rates, it said: "Given the current tightness of the labour market, continuing signs of robust domestic cost and price pressures, and the risk that those pressures will persist, the committee judges that an increase in Bank Rate of 0.25 percentage points is warranted at this meeting.
"Based on its current assessment of the economic situation, the committee judges that some further modest tightening in monetary policy may be appropriate in the coming months, but there are risks on both sides of that judgement depending on how medium-term prospects for inflation evolve."
12.00pm: Rates rise for third time since December
The Bank of England has raised UK interest rates by 0.25 percentage points to 0.75%, the third increase in a row and in line with market expectations.
Despite the uncertainties caused by the conflict in Ukraine, the Bank has acted to try and curb rising inflation. The consumer price index is 5.5% - well above its target of 2% - and could hit 7.25% by April. Further out rising energy and food prices could send that figure even higher.
11.56am: US markets set to fall
US stocks are expected to open lower on Thursday after Wednesday’s rally on the back of the Federal Reserve’s quarter-point hike in its benchmark interest rate, with the Russia/Ukraine conflict still in focus.
Futures for the Dow Jones Industrial Average shed around 0.3%, while those for the broader S&P 500 index also fell 0.3% and contracts for the tech-heavy Nasdaq-100 were down 0.4%.
The Fed’s rate hike – the first since 2018 – was broadly expected and officials have signaled more rate increases in 2022, coming at each of its remaining six policy meetings for the year, in a move investors see as an aggressive approach towards curbing surging prices.
Neil Wilson, chief market analyst for Markets.com said: "The Fed thinks they can tighten without impacting the labour too much – I tend to agree. Tightening will impact Wall Street more than Main Street at this point … further down the line is harder to call (as) it could lead to recession. Another thing is that getting inflation under control is job one to scotch the ‘stagflation’ chatter. It was noteworthy that in a response to whether the Fed would be prepared to take the path it did under Paul Volcker and do whatever it takes to get inflation under control, Powell responded in the affirmative. I think the urgency is at last there, very late, and the market kind of liked that."
Markets had started to rebound after coming under pressure from the Russia-Ukraine conflict and surging energy prices as a result of uncertainty over Western sanctions on Russia and how global central banks would react to the war.
Commenting on the Ukraine situation, Wilson said: "Headlines aplenty coming out of Ukraine-Russia peace talks – FT headline yesterday pointing to a 15-point peace plan saw risk catch bid yesterday afternoon, but subsequent headlines and responses were a lot sketchier. Putin reiterated that Russia will achieve all its tasks but is ready for talks, but Lavrov was suggesting the two sides were nearing consensus on wording. We need to monitor. Oil prices are a bit higher this morning after sliding for most of yesterday. "
"There was a nod to Ukraine, saying the invasion will likely create “additional upward pressure on inflation and weigh on economic activity”, but there is no sense that the FOMC is slowing down because of it," he added.
The market’s focus has turned to the resumption of cease-fire talks between Russia and Ukraine and as investors continue to digest the Fed’s latest statement. Analysts see the S&P 500 heading for its best weekly performance in over three months.
However, sentiment in commodity markets continues to show signs of stress from the Russia-Ukraine conflict, with oil prices rising and Brent crude adding 3.2% to trade at $101.12 a barrel.
11.47am: AstraZeneca slips on patent payout
The market continues to drift ahead of the expected rate rise from the Bank of England.
The FTSE 100 is currently up 1.79 points at 7293.47.
AstraZeneca PLC (LSE:AZN) has slipped 0.8% as the pharmaceuticals group was set to pay out US$775mln to settle a patent dispute between its recently acquired rare diseases business Alexion and Chugai Pharmaceutical.
10.48am: Pound moves ahead as investors await Bank of England decision
As we await the Bank of England news, the pound is heading higher on the basis that UK interest rates will rise.
Against the dollar, sterling is up 0.33% at US$1.3182 while it has climbed 0.18% to €1.1943.
Meanwhile the FTSE 100 continues to drift between positive and negative territory.
It is now up 3.26 points at 7294.94, having climbed as high at 7336 and slipped as low as 7260.
10.01am: Footsie falls back
Well it was heading that way and here we are.
After early gains, the leading index has been heading south.
The FTSE 100 briefly dipped into the red but is now virtually flat, up just 2.8 points at 7294.48.
Investors are clearly hedging their bets ahead of the Bank of England interest rate decision, not to mention awaiting further news on any agreement in Ukraine.
A 6.98% fall in Ocado Group PLC (LSE:OCDO) after it warned of margin pressure in its retail business is not helping matters, nor is a number of companies going ex-dividend, including M&G PLC (LSE:MNG), down 5.14%.
9.55am: Nickel market "in disarray"
The nickel market continues to prove rather chaotic.
After a shutdown last week amid volatile pricing and a less than successful reopening on Wednesday, the London Metal Exchange has halted trading again today.
Victoria Scholar, head of investment at interactive investor said: “The London Metal Exchange has upped its maximum allowed percentage move before trading halts kick in for nickel from 5% to 8% after the market reopened more than 8% lower triggering a halt at Wednesday’s market open, when the metal made a short-lived attempt to play catch up after trading was postponed for a week amid the volatility.
"Chaos and uncertainty prompted traders to steer clear of the market altogether when price action resumed in the afternoon, resulting in the thinnest volume day of trade for 16 years.
"This morning Nickel has opened down 8%, prompting a trading halt once again, suggesting that the market remains in disarray.”
9.16am: Footsie loses some of its early impetus
Leading shares have lost some of their early momentum although they remain in positve territory ahead of the Bank of England interest rate decision.
The FTSE 100 is now up 9.10 points or 0.12% at 7300.78 having earlier reached 7336.
The risers are a mixed bunch.
Gaming group Entain PLC (LSE:ENT) is up 3.32% to 1650p after Berenberg issued a buy note (although it cut its price target from 2165p to 2060p) and information firm Informa PLC (LSE:INF) has added 2.62%.
Scottish Mortgage Investment Trust PLC (LSE:SMT) - which has a number of tech investments in the US and China - has benefited from the rise on Nasdaq and the Chinese authorities promising to support markets. It is up 2.33%.
Russia's Polymetal International PLC (LSE:POLY) continues its volatile course, up 2.13% so far today.
And drinks giant Diageo PLC (LSE:DGE) has added 1.87% to 3667p as analysts at JP Morgan moved from neutral to overweight with a 4350p price target.
8.35am: Ocado update sees shares fall
Ocado Group PLC (LSE:OCDO) has now taken the wooden spoon in the FTSE 100 as investors react to an update from its retail business.
The business - its joint venture with Marks and Spencer Group PLC (LSE:MKS) - said first quarter revenues were down 5.7% but average orders were up 11.6%.
Richard Hunter, head of markets at interactive investor, said: "The numbers are..somewhat mixed, with revenues down by 5.7% (but up by 31.7% if compared to 2020), and with the number of active customers having increased by 31% to 835000. However, the average basket size dropped by 15%, offsetting the fact that there was an increase of 11.6% in customer orders.
"The retail business continues to ramp up fulfilment capacity, but in the meantime is facing the headwinds which are being seen across many sectors. Labour shortages, price increases in raw materials, energy, utilities and even dry ice compound inflationary effects at a time when the cost of living is reaching alarming levels for many. Nonetheless, the group is focused on mitigating these issues by cost reduction and some passing on of the higher prices to consumers, noting that demand remains robust."
But the investment case for the group is based more on its solutions business, where it is investing heavily, and this is not covered by this update.
The reaction is a 7.4% decline in the share price, which has already dropped 45% over the last year.
Hunter said: "The danger of Ocado becoming a perennial “jam tomorrow” stock is reflected in that underperformance, while the ongoing lack of a dividend payment offers little solace to investors. Meanwhile, the negative reaction to a statement which only covers the retail arm is further proof a growing lack of support from investors for the group as a whole. The prospects for the group, and for the Solutions business in particular, are well understood but have yet to convert into a continually profitable business."
8.21am: Ex-divs among the day's fallers
The FTSE 100 fallers are dominated by companies going ex-dividend.
These are M&G PLC (LSE:MNG), down 5.1%, Anglo American PLC (LSE:AAL), 2.54% lower, NatWest Group PLC (LSE:NWG), off 1.85%, Hikma Pharmaceuticals PLC (AIM:HIK, OTC:HKMPF), down 1.16% and SEGRO PLC (LSE:SGRO), dipping 0.72%.
8.14am: Investors in positive mood again
Leading shares have continued the positive mood from Wednesday, when investors took heart from talks between Ukraine and Russia to end the conflict, as well as a pledge from Chinese authorities to support financial markets.
The US Federal Reserve's decision to raise interest rates was well flagged, and markets took the move in their stride.
Today the Bank of England is set to follow suit and make its third rise since December.
Despite the uncertainty caused by the Ukraine attacks, the Bank is likely to act to tackle inflation, which is already at 5.5% and set to hit 7.25% by April.
The Bank's target of course is well below that at 2%.
In February the Bank's monetary policy committee members voted by a majority of 5-4 to increase rates by 0.25 percentage points, to 0.5%. The minority wanted a rise of 0.5 percentage points to 0.75%, and today they are likely to get their wish.
Michael Hewson at CMC Markets UK said: "It’s hard to see how the Bank of England can avoid raising rates again by 0.25% to 0.75% and put the base rate back to where it was pre-pandemic... We’re still at very historically low levels of interest rates.
"The last time inflation was this high, base rates were over 6%."
In early trading the FTSE 100 has added 32.93 points or 0.45% to 7324.61.
6.50am: Leading shares tipped to edge higher
FTSE 100 looked to be heading for a decent start even though the Federal Reserve raised US interest rates for the first time since 2018.
Spread bet firms were calling the Footsie up around four points two hours before the opening bell in London, but that might change for the better when trading does get underway, especially after strong gains in Asia and on US markets overnight.
Big tech stocks were the main gainers with the FANG+ index enjoying its best day on record with a gain of more than 10% as China stocks bounced back.
Salman Ahmed, global head of macro at Fidelity International, said: “As expected the Fed hiked by 25bp at today’s meeting.
“However, the main change was a big shift in dot plot where the median dot now shows 7 hikes for 2022.
"We continue to think the Fed will eventually hike 3 or 4 times this year but the ensuing tightening conditions from a very hawkish Fed will damage growth.”
Footsie rose 116 points on Wednesday as China-focused stocks rallied and on talk that had been some progress in peace talks between Russia and Ukraine but these hopes seemed to have faded with more heavy shelling of the capital Kyiv.
Has Ukraine war affected Bank of England mood on interest rates? - Thursday's agenda
UK attention will be focused on the Bank of England with a 0.25 basis points rate (0.25%) rise expected later today and that will take the rate overall to 0.75% or the level before the pandemic started.
Economists are forecasting more rises during this year but the surge in commodity prices following the situation in Ukraine might have changed the thinking at Monetary Policy Committee.
Company news today sees updates from Deliveroo, Ocado, Cineworld, Ceres Power, Trainline and also North-Sea focused Harbour Energy (LSE:HBR) PLC, which should have been a major beneficiary of the recent uptick in oil prices.
6.50am: Early Markets - Asia / Australia
Asia Pacific shares continued to extend their gains for a second day on Thursday after the U.S. Federal Reserve announced overnight its first rate hike in more than three years.
Japan’s Nikkei 225 surged 3.46% while South Korea’s Kospi lifted 1.47%.
The Shanghai Composite in China gained 1.63% and Hong Kong’s Hang Seng index jumped 5.26%.
Australia’s S&P/ASX200 climbed 1.1% to close at 7250.8 points after the country’s jobless rate tumbled to a 14-year low of 4%.
https://news.google.com/__i/rss/rd/articles/CBMigQFodHRwczovL3d3dy5wcm9hY3RpdmVpbnZlc3RvcnMuY28udWsvY29tcGFuaWVzL25ld3MvOTc3MDUxL2Z0c2UtMTAwLWVuZHMtaGlnaGVyLWFzLWZpbmFuY2lhbC1jb21tb2RpdHktc3RvY2tzLWFkdmFuY2UtOTc3MDUxLmh0bWzSAT5odHRwczovL3d3dy5wcm9hY3RpdmVpbnZlc3RvcnMuY28udWsvY29tcGFuaWVzL2FtcC9uZXdzLzk3NzA1MQ?oc=5
2022-03-17 16:55:20Z
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