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LONDON MARKET OPEN: European stocks lifted on Wall Street's gains

2nd Feb 2024 08:54

(Alliance News) - Stock prices in London opened higher on Friday, closing of a busy week of monetary policy decisions.

The FTSE 100 index opened up 39.43 points, 0.5%, at 7,661.59. The FTSE 250 was up 170.25 points, 0.9%, at 19,301.41, and the AIM All-Share was up 2.46 points, 0.3%, at 755.16.

The Cboe UK 100 was up 0.6% at 766.55, the Cboe UK 250 was up 0.8% at 16725.02, and the Cboe Small Companies was down slightly at 14,662.17.

In the US on Thursday, Wall Street ended higher, with the Dow Jones Industrial Average up 1.0%. Both the S&P 500 and the Nasdaq Composite closed up 1.3%.

In European equities on Friday, the CAC 40 in Paris was up 0.3% and the DAX in Frankfurt was up 0.4%.

The week has been dominated by interest rate decisions across the globe.

"The year starts with the sweet smell of the upcoming interest rate cuts, like a freshly baked apple pie ready to come out of oven," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

"So, let's hope that the Fed won't burn the pie."

At its February meeting, on Thursday, the BoE kept its bank rate at 5.25%. It is the fourth successive hold, following one in September, which ended a streak of 14 consecutive hikes since December 2021, and two more in November and December. The BoE had rapidly increased bank rate from a Covid-19-induced low of 0.10%.

It was a split outcome, with six Monetary Policy Committee members, Governor Andrew Bailey included, favouring the hold. Two would have preferred rates to have been lifted by 25 basis points, they were Jonathan Haskel and Catherine Mann. One member, Swati Dhingra, preferred to reduce bank rate by 25 basis points, to 5%.

Meanwhile, in the US on Wednesday, the Federal Open Market Committee unanimously voted not to raise the fed funds rate, for the fourth meeting in a row. The key rate is targeted in a range between 5.25%-5.50%, the highest in nearly 23 years.

Speaking after the vote, Powell said a rate cut in March, is not the "most likely case."

"I don't think it's likely that the committee will reach a level of confidence by the time of the March meeting, to identify that March is the time to do that," Powell told reporters at a press conference.

According to the CME FedWatch Tool, there is a 36% chance the central bank lowers the federal funds rate range in March from the current 5.25% to 5.50%. A cut was once the most likely outcome for the March meeting.

Still to come on Friday, the US nonfarm payrolls data to be released at at 1330 GMT.

Adding to interest rate worries lately has been the Israeli/Gaza war.

Somewhat more positively, Hamas has given "initial positive confirmation" to a proposal for the cessation of fighting in Gaza and the release of hostages, Qatar's foreign ministry spokesperson said.

US, Egyptian and Qatari mediators met with Israeli intelligence officials in Paris on Sunday where they proposed a six-week pause in the Gaza war and a hostage-prisoner exchange for Hamas to review.

"That proposal has been approved by the Israeli side and now we have an initial positive confirmation from the Hamas' side," Majed al-Ansari told an audience at a Washington-based graduate school.

On the back of the news, the price of oil fell below the USD79 mark. Brent oil was quoted at USD78.85 a barrel early in London on Friday from USD81.21 late Thursday.

BP and Shell dropped on the back of lower oil prices. They were down 1.6% and 0.5%, respectively.

Airlines were fairing well on Friday morning, with Wizz Air soaring 6.0% in London and Ryanair up 1.2% in Dublin.

Dublin-based Ryanair said that it carried 12.2 million passengers in January 2024, up 3.4% from 11.8 million in the corresponding month last year. Its load factor fell by two points to 89% from 92% the year before.

On a rolling 12-month basis to January, Ryanair said it carried 182.1 million passengers, up 10% from 165.3 million the year prior. The load factor improved by one point to 94% from 93% in the first month of 2023.

Ryanair added that there was a short-term reduction to its load factor following the removal of most of its flights from online travel agency pirate websites in early December.

Meanwhile, Budapest-based Wizz Air said it carried 4.7 million passengers in January, up 14% from 4.1 million a year ago. Capacity for the month was 20% higher at 5.8 million seats, compared to 4.8 million seats in January 2023.

Its load factor was lowered year-on-year by four points to 82% from 86%.

The Hungarian airline also said it will restart operations into Tel Aviv, with routes from Budapest, Sofia, Bucharest, Krakow, London and Rome from the beginning of March. Back in November, Wizz Air suspended operations in Israel.

easyJet rose 2.0% in a positive read across the board.

On AIM, Orchard Funding plummeted 26%.

The professional fee funding provider said that following the conclusion of a recent FCA review, a number of insurers are withdrawing products from the guaranteed asset protection insurance market.

"GAP insurance is sold as an add-on to motor insurance, covering the difference between a vehicle's purchase price and its current market value," it said.

Over 20% of Orchard Funding's assets are finance GAP insurance products, therefore the withdrawal of these insurance products is likely to have a material adverse impact on its financial results over the current financial year.

The pound was quoted at USD1.2757 early on Friday in London, higher compared to USD1.2708 at the equities close on Thursday. The euro stood at USD1.0878, up against USD1.0851. Against the yen, the dollar was trading at JPY146.65, higher compared to JPY146.13.

In Asia on Friday, the Nikkei 225 index in Tokyo was up 0.4%. In China, the Shanghai Composite was down 1.5%, while the Hang Seng index in Hong Kong was down 0.2%. The S&P/ASX 200 in Sydney closed up 1.5%.

Gold was quoted at USD2,056.11 an ounce, lower against USD2,061.02.

By Sophie Rose, Alliance News senior reporter

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Copyright 2024 Alliance News Ltd. All Rights Reserved.

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