19th Mar 2025 16:58
(Alliance News) - London's FTSE 100 closed little changed Wednesday as investors stayed sidelined ahead of interest rate calls in the US and the UK.
The FTSE 100 index closed up just 1.43 points at 8,706.66. The FTSE 250 rose 24.60 points, 0.1%, at 20,122.37, and the AIM All-Share edged up just 0.34 of a point at 694.62.
The Cboe UK 100 ended up 0.2% at 871.31, the Cboe UK 250 climbed 0.2% at 17,551.55, but the Cboe Small Companies ended down 0.5% at 15,597.66.
In European equities on Wednesday, the CAC 40 in Paris ended up 0.8% while the DAX 40 in Frankfurt closed 0.4% lower.
There was good news on inflation in the eurozone, which slowed more than anticipated in February, according to data published by Eurostat.
The annual consumer price inflation rate decelerated to 2.3% in February from 2.5% in January. The reading for February was downwardly revised from an initially reported 2.4%.
Capital Economics analyst Jack Allen-Reynolds commented: "Eurozone services inflation fell to a 10-month low in February and leading indicators point to further declines in the coming months. We think this will prompt the ECB to cut interest rates at its meetings in April and June, taking the deposit rate from 2.50% to 2.0%."
Year-on-year services inflation in the single currency area faded to 3.7% in February, from 3.9% in January.
Stocks in New York were higher at the London equities close, with the DJIA up 0.7%, the S&P 500 index 0.8% higher, and the Nasdaq Composite 1.1% to the good.
The US Federal Reserve is expected to leave interest rates unchanged when it announces its decision at 1800 GMT. A press conference with Chair Jerome Powell will follow shortly after.
In January, the Federal Reserve left interest rates unchanged, highlighting solid economic growth and "somewhat elevated" inflation. It kept the Fed funds rate range at 4.25%-4.50%.
According to the CME FedWatch Tool, there is a 99% chance it will keep rates unmoved on Wednesday.
"The March FOMC meeting will likely be all about policy uncertainty. The Fed will almost certainly stay on hold, emphasising patience over panic," Bank of America analysts commented.
Included in the decision will be the US central bank's latest summary of economic projections.
JPMorgan expects no change to the median interest rate forecast on the 'dot plot' for 2025, predicting the chart will still say two 25 basis point cuts are in the offing this year.
On Thursday, the Bank of England is also expected to leave interest rates unchanged at 4.50%.
Citi said the Monetary Policy Committee appears to be split on the nature of economic weakness in the UK, which leaves a "high burden of proof" for further cuts in place.
"We do not think data over the last month meets this hurdle. We expect the committee to hold rates steady, with little change to the guidance that will continue to favour caution and time optionality while the incoming cost shocks are digested."
The pound was quoted lower at USD1.2974 at the London equities close Wednesday, compared to USD1.2991 at the close on Tuesday. The euro stood at USD1.0883 against USD1.0931. Against the yen, the dollar was trading higher at JPY149.87 compared to JPY149.55 late Tuesday.
In Japan, the central bank left rates unchanged, although the Bank of Japan noted "high uncertainties" surrounding Japan's economic activity and prices, including the "evolving situation regarding trade".
On the FTSE 100, M&G rose 2.0% after winning plaudits for an improved outlook and an annual profit beat, although disappointing net flows and a modest dividend increase curbed some of the enthusiasm.
Adjusted operating profit increased 5.0% to GBP837 million from GBP797 million, 8.8% ahead of GBP769 million company compiled consensus, reflecting a 19% increase in the Asset Management contribution and stable results from the Life and Corporate Centre segments.
The Solvency II coverage ratio improved to 223% at December 31 from 203% a year ago, ahead of 216% consensus.
M&G set its total dividend for the year at 20.1 pence per share, up 2.0% on-year from 19.7p. This includes a second interim dividend of 13.5p, up 2.3% from 13.2p last year.
Chief Executive Officer Andrea Rossi said the increase was the first step in a new "progressive" dividend policy.
Bank of America said: "This is a strong update and should help the stock re-rate, alongside UK life peers."
On the FTSE 250, Softcat jumped 11% as interim results reinforced confidence in its growth prospects.
The provider of IT infrastructure products and services on Wednesday raised its annual outlook, after a strong first half and "an encouraging second half pipeline".
"Softcat's shares have tracked the FTSE All Share over the past three months, balancing optimism about the company’s growth potential with caution over near-term performance amid the UK's ongoing GDP headwinds," said broker Shore Capital.
"The company has not disappointed, delivering a solid performance across gross profit, [earnings before interest and tax] and [earnings per share] growth, and a slightly raised outlook for Ebit growth outlook for FY25F."
Meanwhile, Bridgepoint rose 3.0% after Citi upgraded to 'buy' from 'neutral'.
But Wizz Air fell 5.0% on concerns over rising tensions in the Middle East while US-Russia ceasefire talks underwhelmed.
Jefferies explained Wizz Air has the greatest exposure to peace.
"Ukraine, Russia and Israel combined were 12% of capacity pre-war. With shares 23% year to date as the market started to factor peace in these markets, we expect share price weakness today. If peace does not materialise as quickly as expected, we see yield and earnings pressure," the broker added.
Brent oil was quoted slightly lower at USD70.72 a barrel at the London equities close Wednesday from USD70.76 late Tuesday.
Gold was little changed at USD3,036.51 an ounce on Wednesday against USD3,035.29 on Tuesday.
Thursday's UK corporate calendar has full-year results from Energean and Bloomsbury Publishing.
The economic calendar for Thursday has interest rate decisions in the UK, Switzerland and South Africa, UK unemployment data and US weekly jobless claims figures.
By Jeremy Cutler, Alliance News reporter
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