26th Oct 2022 17:22
(Alliance News) - Stocks in London closed higher on Wednesday, with sentiment lifted by the afternoon's monetary policy decision by the Bank of Canada.
The decision by the BoC to increase its key interest rates by a smaller than expected increment raised hopes that an end to tightening by central banks is on the horizon.
"The BoC decision to raise rates by 50-basis points does further develop a theme led by the [Reserve Bank of Australia], whereby central banks are willing to slow their pace of tightening as we approach their so-called ‘terminal rate,'" explained Joshua Mahony at IG.
The FTSE 100 index closed 42.59 points, or 0.6% at 7,056.07 on Wednesday. The FTSE 250 ended up 274.26 points, or 1.5%, at 18,105.89. The AIM All-Share closed up 10.23 points, or 1.3%, at 809.67.
The Cboe UK 100 ended up 0.5% at 704.52, the Cboe UK 250 closed up 1.8% at 15,499.59, and the Cboe Small Companies ended up 0.7% at 12,342.94.
The BoC increased its target for the overnight rate by half a percentage point to 3.75%, with the bank rate at 4.0% and the deposit rate at 3.75%.
A chunkier rate hike of 75 basis points was expected, according to consensus cited by FXStreet.
Markets are now hoping the Federal Reserve will follow suit next week.
The US Federal Reserve will announce its next rate decision at the start of November.
Until then, investor eyes will be focused on the European Central Bank, which announces an interest decision at 1315 BST on Thursday.
The ECB raised interest rates in July for the first time in 11 years, by half a percentage point. Analysts are all but convinced the central bank will up rates by another 0.75% on Thursday, but some say there is room for a full percentage point raise - 100 basis points.
Sterling continued to gain ground on Wednesday despite a two-week delay to the UK government's fiscal plan.
The medium term fiscal plan will now be published on November 17 as an autumn statement – alongside a new set of economic forecasts from the Office for Budget Responsibility.
The pound was quoted at USD1.1612 at the London equities close Wednesday, up sharply from USD1.1464 at the close on Tuesday.
Helping to boost the pound was dollar weakness, amid expectations of less hawkish Fed.
In the FTSE 100, Standard Chartered was the worst performer. The stock closed down 5.1% despite recording a substantial increase in profit as it benefitted from rising interest rates across the world.
In the three months that ended September 30, the Asian-focused bank reported a 40% increase in pretax profit to USD1.39 billion from USD996 million a year before.
Chief Executive Bill Winters called the results "strong" and said the bank remains confident in the delivery of its 2024 financial targets, adding it has made "significant progress" against the five strategic actions outlined in February.
Reckitt Benckiser closed down 3.7%. The consumer goods firm posted strong quarterly revenue growth as prices and mix improved, despite a decline in volumes.
In the third quarter, total revenue grew 14% year-on-year to GBP3.74 billion, or 7.4% on a like-for-like basis. Meanwhile, price and mix improvements of 12% helped to offset a volume decline of 4.6%.
With a strong performance in the year so far, Reckitt reiterated its annual targets. However, for like-for-like revenue growth, it tweaked the range upwards to between 6% and 8%, compared to 5% and 8% previously.
Fresnillo climbed 3.8% as it posted solid quarterly production figures and backed annual its annual guidance.
The Mexico City-based silver and gold miner said volumes at Fresnillo and Saucito continued to improve, but this was partially offset by lower ore throughput and grade variability at San Julian.
Despite the challenges, Fresnillo said it remains on track to meet annual guidance of 50.5 to 56.5 million ounces of attributable silver and silverstream, and 600 to 650,000 ounces of attributable gold.
In the FTSE 250, Bytes Technology dropped 14% despite posting double-digit top-line growth.
The computer software firm posted revenue of GBP93.5 million in the six months to August 31, up 28% from GBP73.1 million. Pretax profit grew 18% to GBP27.0 million from GBP22.9 million.
Bytes Technology said it has also made a decent start to its second half.
Elsewhere in London, IGas Energy plunged 27% after UK Prime Minister Rishi Sunak reintroduced the moratorium on fracking in England.
The Lincoln, England-based oil and gas producer had previously supported the UK government's support of fracking under Liz Truss.
Truss had lifted the ban as she argued it would strengthen the country's energy supply.
In European equities on Wednesday, the CAC 40 in Paris ended up 0.4%, while the DAX 40 in Frankfurt ended up 1.1%.
The euro stood at USD1.0064 at the European equities close Wednesday, higher against USD0.9963 at the same time on Tuesday.
Against the yen, the dollar was trading at JPY146.50 late Wednesday, lower compared to JPY147.77 late Tuesday.
Stocks in New York were mixed at the London equities close, with the Dow Jones Industrial Average up 0.9%, the S&P 500 index up 0.5%, and the Nasdaq Composite down 0.3%.
Brent oil was quoted at USD93.93 a barrel at the London equities close Wednesday, up from USD91.91 late Tuesday.
Gold was quoted at USD1,665.70 an ounce at the London equities close Wednesday, higher against USD1,655.96 at the close on Tuesday.
On Thursday's UK corporate calendar, there are third quarter results from Shell and Unilever, as well as trading statements from Lloyds Banking and Anglo American.
In the economic calendar, the ECB will announce its interest rate decision at 1315 BST. There is also a US GDP reading at 1330 BST.
By Heather Rydings; [email protected]
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