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LONDON MARKET OPEN: Shares rise despite US interest rate unease

4th Apr 2024 08:47

(Alliance News) - London's FTSE 100 edged higher on Thursday morning, despite lingering US interest rate worries hanging over equities, while gold notched another record high in earlier trade.

The FTSE 100 index opened up 18.52 points, 0.2%, at 7,955.96. The FTSE 250 was up 34.02 points, 0.2%, at 19,787.66, and the AIM All-Share was up 0.82 of a point, 0.1%, at 742.90.

The Cboe UK 100 was up 0.3% at 795.53, the Cboe UK 250 also rose 0.3% to sit at 17,209.40, while the Cboe Small Companies was flat at 14,656.34.

The CAC 40 in Paris rose 0.2%, while the DAX 40 in Frankfurt traded flat.

US stocks ended largely higher overnight. The Dow Jones Industrial Average fell 0.1%, the S&P 500 rose 0.1% and the Nasdaq Composite added 0.2%.

In Tokyo on Thursday, the Nikkei 225 rose 0.8%, while the S&P/ASX 200 in Sydney added 0.5%. Financial markets in in Hong Kong and Shanghai will be closed for Tomb Sweeping Day both Thursday and Friday.

"Interest rate intrigue continues to hover, with the many variables leading investor sentiment in different directions," interactive investor analyst Richard Hunter commented.

"The main US indices were mixed to positive in choppy trading, in contrast to recent days where interest rate cut projections have weighed on market performance."

The US Federal Reserve's high benchmark rate is "doing its job" against elevated inflation, Chair Jerome Powell said Wednesday, warning that lowering it too soon could be "quite disruptive" for the American economy.

The US central bank has held interest rates at a 23-year high of between 5.25% and 5.50% as it seeks to bring inflation firmly down to its long-term target of 2%.

Last month, Fed policymakers pencilled in three rate cuts for this year, staying the course despite a recent uptick in inflation which has disrupted recent progress against rising prices.

Powell told a conference in California that the current risks to the US economy were "two-sided," with negative consequences for the economy if policymakers moved to cut rates too fast or too slow.

"The risk, though, of moving too soon, really is.. that inflation does move up," he said, adding that it "would be quite disruptive if we were to have to then come back in."

But if the US economy continues to evolve as expected, most Fed participants still expect it will be "appropriate to begin lowering the policy rate at some point this year," he said.

Eyes now turn to Friday's nonfarm payrolls reading, which is expected to show the pace of jobs growth eased to 200,000 in March, from 275,000 in February, according to FXStreet.

Numbers on Wednesday from payroll processor ADP showed the US private sector added more jobs in March than a month earlier.

Private sector employment increased by 184,000 jobs in March, rising from 155,000 in February. March's jobs growth topped the FXStreet cited consensus of 148,000.

Still to come on Thursday, the latest US jobless claims reading is at 1330 BST. Elsewhere, the economic calendar has a producer price reading from the eurozone at 1000 BST, as well as a slew of composite purchasing managers' index readings, including the UK at 0930 BST.

The pound was quoted at USD1.2665 early Thursday, up from USD1.2630 late Wednesday. The euro stood at USD1.0853, rising from USD1.0827. Against the yen, the dollar was trading at JPY151.70, down slightly from JPY151.72.

Gold was quoted at USD2,297.22 early Thursday UK time, rising from USD2,286.90 at the time of the London equities close on Wednesday. It had spiked to USD2,304.89 earlier on Thursday. Brent oil was quoted at USD89.35, falling from USD89.69.

In London, Future shares shot up 11%. The online magazine publisher and owner of the Go.Compare price comparison website hailed a return to organic revenue growth in its second quarter ended March 31.

"The return to growth has been driven by a strong performance in Go.Compare, alongside good growth in B2B, and a resilient performance in magazines," it said.

It noted a continued "challenging performance" in digital advertising, however, "as macroeconomic pressures and low visibility continue to impact the wider sector". It added it is on track to meet its full-year expectations.

Ascential rose 4.0% as it earmarked a shareholder return plan of GBP850 million.

BT and Vodafone moved in opposite directions, as a UK watchdog announced a deeper probe of the latter's planned tie-up with Three.

BT added 2.5%, while Vodafone lost 0.3%.

The UK's competition watchdog on Thursday said the proposed merger of Vodafone's UK offering with CK Hutchison-owned Three UK will be the subject of a more in-depth probe.

The Competition & Markets Authority said any measures to soothe antitrust concerns were not offered to the regulator.

"The CMA has therefore decided to refer this merger for a phase 2 investigation," it said.

Elsewhere in London, Cavendish Financial jumped 30%.

The stockbroker, created by the merger of finnCap Group and Cenkos Securities, said it saw "significant growth" in the second half to March 31, with revenue jumping 77% to GBP34.5 million from the pro-forma first-half revenue of GBP19.5 million. Revenue for the full-year is expected to rise 44% to GBP47.5 million from GBP32.9 million. Pro-forma revenue of GBP54 million is expected, rising from GBP50.5 million.

The pro-forma calculations are made adding the revenue of finnCap and Cenkos as if they were consolidated fully during that time.

"The newly merged team delivered an H2 performance well ahead of H1 as we completed multiple deals for our clients, across all parts of our business and strengthened our balance sheet further," Cavendish said.

"Whilst the interest rate cycle appears to have peaked, conditions continue to impact demand for UK equities, making deal execution in ECM challenging across all market participants. However, private and public M&A has remained buoyant in H2 and our pipeline across both ECM and M&A remains good."

By Eric Cunha, Alliance News news editor

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