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LONDON MARKET MIDDAY: FTSE 100 pushes higher ahead of Fed chair speech

25th Aug 2023 12:07

(Alliance News) - The FTSE 100 edged higher at midday on Friday as all eyes turned to US Federal Reserve Chair Jerome Powell's address at Jackson Hole later in the day.

The FTSE 100 index was up 35.67 points, or 0.5%, at 7,369.51. Meanwhile, the FTSE 250 was up just 3.12 points at 18,197.69, and the AIM All-Share was virtually flat at 734.50.

The Cboe UK 100 was up 0.4% at 734.13, the Cboe UK 250 was down 0.1% at 15,921.01, and the Cboe Small Companies was up 0.3% at 12,842.82.

Jerome Powell is due to give a 25-minute speech at around 1005 EDT, or 1505 BST.

According to analysts at Lloyds Bank, investors will be looking for two key points in his remarks. Firstly, any sign of Powell confirming a pause to interest rate hikes at the next meeting in September. Secondly, whether he will indicate that rates are likely to have peaked and when they could be cut.

Francesco Pesole at ING remarked that some Fed speakers have already laid the groundwork for Friday's keynote speech, with Patrick Harker, president of the Federal Reserve Bank of Philadelphia, leaning on the dovish side and saying that the Fed has "probably done enough" on policy tightening.

Pesole noted that Susan Collins, president of the Federal Reserve Bank of Boston, also suggested the Fed may have to hold for some time, though she refrained from signalling where the peak is.

There will also be an address from European Central Bank President Christine Lagarde later on Friday.

During the Saturday session, there will be a panel featuring Bank of England Deputy Governor Ben Broadbent and Bank of Japan Governor Kazuo Ueda, which will discuss the topic of 'Globalization at an Inflection Point'.

The dollar was firmly on the front foot midday on Friday as traders readied themselves for Powell's address.

The pound was quoted at USD1.2595 at midday on Friday in London, down from USD1.2639 at the equities close on Thursday. The euro stood at USD1.0797, lower against USD1.0835. Against the yen, the dollar was trading at JPY146.03, higher compared to JPY145.66.

In London, Watches of Switzerland plunged 21% despite reassuring the market that the acquisition by Rolex of Swiss watch retailer Bucherer will not change its relationship with the key supplier.

"Investors seem to fear the tie-up will mean Bucherer gets preferential treatment including better access to the watches that consumers are desperate to buy," Russ Mould, investment director at AJ Bell explained.

Rolex on Thursday announced it will buy Bucherer to "preserve the close partnership ties that have linked both companies since 1924".

Watches of Switzerland said the acquisition doesn't represent a strategic move into retail by Rolex, and there will be no change in the product allocation or distribution of Rolex watches.

Watches of Switzerland said it had this "confirmed by the highest level of Rolex management" in Geneva.

Analysts at Shore Capital said that while the news marked a "significant shift" in the luxury watch market, it is not revising its estimates at this stage as it believes that the deal is "unlikely" to impact Watches of Switzerland's sales of Rolex in the short term.

Shore added it would be "keenly observing" the market's response to the news on Friday, saying if there were to be a "substantial drop in value" there may be an "attractive buying opportunity" for the stock.

Aston Martin was the best performer in the FTSE 250, up 5.7%, after Jefferies raised the luxury car maker to 'buy' from 'hold'.

"Current metrics look worse or no better than at the 2018 [initial public offering]. However, now feels like a new start at [Aston Martin] with net debt stabilized, renewed focus on front-engine cars and sharp [average selling price] upgrades," Jefferies explained.

CMC Markets slid 15% after the online trading platform warned of a drop in annual income as "subdued market conditions" in the month of August weighed on trading.

CMC now expects net operating income of between GBP250 million and GBP280 million for financial 2024, falling short of GBP288.4 million in financial 2023.

This was attributed to "markedly lower monetisation of client trading activity due to a higher proportion of lower margin institutional volume".

On AIM, Proteome Sciences fell 21% after it reported it swung to a loss in the first half of 2023, amid higher costs and virtually flat revenue.

The protein-focused drug development services provider said its pretax loss in the first half of the year was GBP547,000, swung from a profit of GBP75,000 a year prior. Revenue remained largely flat at GBP3.2 million.

Administrative expenses increased 26% to GBP1.9 million from GBP1.5 million, and finance costs doubled to GBP384,000 from GBP192,000.

Looking ahead, Chief Executive Officer Mariola Soehngen said: "The board is confident of maintaining the good performance into the second half of the year. Tandem Mass Tags revenues remain strong and we have a good dynamic in the order generation of our service business. The launch of SysQuant SCP and the setting up of our US lab are important investments and we expect these to provide a good basis for further growth of the business."

In European equities on Friday, the CAC 40 in Paris was up 0.7%, while the DAX 40 in Frankfurt was up 0.5%.

Stocks in New York were called higher. The Dow Jones Industrial Average was called up 0.3%, the S&P 500 index up 0.3%, and the Nasdaq Composite up 0.1%.

Brent oil was quoted at USD83.79 a barrel at midday in London on Friday, up from USD82.41 late Thursday. Gold was quoted at USD1,917.50 an ounce, lower against USD1,921.41.

By Heather Rydings, Alliance News senior economics reporter

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