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LONDON MARKET MIDDAY: Stocks push higher as rate rise fears ebb

10th Oct 2023 12:01

(Alliance News) - Stock prices in London were sharply higher at midday on Tuesday, buoyed by comments from US Federal Reserve officials indicating that interest rate rises in the world's largest economy may be at an end.

The FTSE 100 index was up 114.60 points, or 1.5%, at 7,606.81. The FTSE 250 was up 302.89 points, or 1.7%, at 17,874.95, and the AIM All-Share was up 7.51 points, or 1.1%, at 695.34.

The Cboe UK 100 was up 1.6% at 759.64, the Cboe UK 250 was up 2.0% at 15,561.05, and the Cboe Small Companies was up 1.6% at 13,210.16.

"Investors regained their appetite for risk after a troublesome start to the trading week linked to concerns about conflict in the Middle East and how the associated hike in commodity prices could feed through to inflation and interest rates staying higher for longer," said Russ Mould, investment director at AJ Bell.

"Triggering the U-turn in the market mood were comments on Monday from [Federal Reserve] Vice Chair Philip Jefferson who implied the US central bank needed to 'proceed carefully' with any further rate hikes."

Jefferson's comments aligned with those from Dallas Fed President Lorie Logan, who noted that tighter financial conditions could mean the central bank does less in terms of raising its policy rate.

Their comments raised hopes that the Fed might not need to lift rates any higher as the central bank aims to return inflation to its two per cent target.

The International Monetary Fund on Tuesday lifted its global inflation outlook for the next couple of years. Inflation is predicted to remain elevated at 6.9% this year, up slightly from July, and 5.8% in 2024, up 0.6 percentage points.

It left its top-line global growth forecast for 2023 unchanged, however, despite significant underlying differences between regions.

The updated World Economic Outlook report maintained a global growth estimate of 3.0% for this year while cutting the 2024 assessment to 2.9%, down 0.1% from the previous forecast in July.

In London, Spirax-Sarco Engineering and Haleon were among the few blue-chip stocks in the red at midday on Tuesday, down 1.1% and 0.2%, respectively.

Meanwhile, Ocado remained one of the FTSE 100's top performers at midday, up 6.1% as fresh data from Kantar revealed a more positive period for Ocado Retail.

Kantar reported that Ocado Retail, an online grocery joint venture between Ocado Group and Marks & Spencer, saw its sales climb 9.6% year-on-year in the 12 weeks ended October 1 to GBP544 million, as its market share edged up to 1.7% from 1.6%.

Shares in M&S were up 1.8%.

There were strong sales performances across the period from Tesco and J Sainsbury.

Tesco's sales rose 9.2% to GBP8.88 billion from GBP8.13 billion a year before, as its market share rose to 27.4% from 27.0%. Sainsbury's sales rose 9.1% to GBP4.82 billion from GBP4.42 billion, as its market share edged higher to 14.8% from 14.7%.

Shares in Tesco were up 1.0%, while shares in Sainsbury's were up 2.3%.

In the FTSE 250, Foresight Group Holdings was flat at midday at 400.0 pence.

The infrastructure and private equity manager said its interim assets and funds under management fell from its financial year-end, but remained optimistic in its outlook.

In the six months ended September 30, Foresight said it expects core earnings before interest, tax, depreciation and amortisation pre-share-based payments to be 20% to 25% ahead of the prior year period.

It explained that this has been driven by a successful prior year and year-to-date fundraising into higher margin and longer tenure vehicles.

Assets under management and funds under management were GBP12.1 billion and GBP8.8 billion, respectively in the period. These are down 0.6% and 2.4% from GBP12.2 billion and GBP9.0 billion at March 31.

Elsewhere in London, Treatt jumped 11% as it offered a sunny outlook for its recently ended financial year.

The extracts and ingredients manufacturer and supplier expects revenue for the year ended September 30 to be GBP147 million, up 5% from GBP140 million the year prior despite a "challenging" environment and sector destocking.

Pretax profit is predicted to be in line with expectations of GBP17 million, up 11% from GBP15.3 million the year prior.

On AIM, Image Scan surged 24% after it said it expects to swing to a profit in the year ended September 30 and report a 50% jump in revenue.

The X-ray screen system supplier to the security and industrial inspection markets said it expects to report "strong" sales and profit growth in the financial year ended September 30.

Revenue is expected to be GBP3 million, up 50% from GBP2 million the previous year. It predicts to swing to a pretax profit of GBP100,000 from a loss of GBP350,000 the year prior.

"The uplift in market activity as mentioned in the interim results has continued and government opportunities which were suppressed or delayed, by Covid and its aftermath, are now actively progressing. The extension of the product range has already borne fruit and offers the company wider opportunities in the Counter Explosive Ordnance portable x-ray marketplace," Image Scan said.

In European equities on Tuesday, the CAC 40 in Paris was up 1.6%, while the DAX 40 in Frankfurt was up 1.7%.

Stocks in New York were called higher. The Dow Jones Industrial Average was called up 0.2%, the S&P 500 index up 0.2%, and the Nasdaq Composite up 0.3%.

The pound was quoted at USD1.2268 at midday on Tuesday in London, up from USD1.2213 at the London equities close on Monday. The euro stood at USD1.0596, higher against USD1.0548. Against the yen, the dollar was trading at JPY148.87, higher compared to JPY148.59.

Brent oil was quoted at USD87.73 a barrel at midday in London on Tuesday, down from USD87.94 at the London equities close on Monday. Gold was quoted at USD1,9857.78 an ounce, higher against USD1,852.16.

By Heather Rydings, Alliance News senior economics reporter

Comments and questions to [email protected]

Copyright 2023 Alliance News Ltd. All Rights Reserved.

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