The FTSE 100 posted solid gains on Wednesday after earlier reaching a new all-time high, buoyed by well-received earnings and advances in BP and Shell as oil prices strengthened. The index closed up 37.39 points, or 0.3%, at 10,908.41. It touched a new intra-day record of 10,951.06 but fell short of its all-time closing high of 10,910.55 set in February.
Market Movers and Company Results
The FTSE 250 ended slightly lower at 23,996.81, while the AIM All-Share fell 6.09 points, or 0.8%, to 761.85. In Europe, the CAC 40 in Paris closed down 0.6% weighed by luxury retailer Hermes, and the DAX 40 in Frankfurt ended marginally lower. US stocks weakened as technology shares declined: the Dow Jones Industrial Average fell 1.5%, the S&P 500 lost 0.8%, and the Nasdaq Composite dropped 1.1%.
Engineering firm Weir Group led blue-chip gainers, up 8.7%, after strong first-half results and better-than-expected orders. Accountancy software provider Sage Group closed up 8.8% following an upbeat trading statement. Reckitt Benckiser rose 4.3% as it announced a share buyback and reported like-for-like sales growth of 4.7% in the second quarter, driven by emerging markets. Asia-focused bank Standard Chartered gained 2.9% after hailing a "record first half performance", announcing a $1 billion buyback and raising guidance.
Oil Prices and Currency Moves
Oil prices surged as US President Donald Trump vowed to hit back hard at Iran after an attack on US bases in Jordan. Brent crude for September delivery traded higher at $90.09 a barrel, up from $84.87 late Tuesday. This boosted oil majors: BP rose 3.4% and Shell gained 2.8%. Gold was lower at $4,011.17 an ounce, dragging shares of Fresnillo down 3.2% and Endeavour Mining down 2.8%.
The pound weakened to $1.3284 against the US dollar from $1.3306 at Tuesday's close, and eased slightly against the euro to €1.1673. The euro stood at $1.1380, down from $1.1397. The dollar firmed against the yen to 163.85 yen. The yield on the US 10-year Treasury rose to 4.64% from 4.59%, and the 30-year yield widened to 5.12% from 5.09%.
Fed Decision and Outlook
After London’s close, attention turns to the US interest rate decision at 7pm and earnings from Meta Platforms and Microsoft. Market pricing puts the chance of a Fed rate hike at around 34%, making it one of the most uncertain meetings in years. Much of this stems from a lack of forward guidance from Fed chairman Kevin Warsh. However, a clear majority of analysts expect rates to remain on hold.
Eric Winograd, senior vice president and director of Developed Market Economic Research at AllianceBernstein, said: “I do not expect the Fed to raise rates this week, and I have not seen any other credible forecaster who thinks that they will do so. That said, it can’t be ruled out.” He noted that the case for a rate hike is weaker now than at the last meeting, as June inflation and payrolls reports were soft. He added that several FOMC members have indicated readiness to raise rates, and if Warsh were to suggest a hike, he likely has enough votes, but uncertainty remains.
On the FTSE 250, Greggs shares jumped 18% after reporting half-year sales and profit ahead of expectations. Pre-tax profit rose 20% to £76 million on revenue up 7.2% to £1.1 billion. The biggest risers on the FTSE 100 were Sage Group, Weir Group, Burberry, Reckitt Benckiser, and BP. The biggest fallers were Aberdeen, Diploma, IMI, Halma, and Fresnillo.
Thursday’s economic calendar includes the UK interest rate decision, eurozone unemployment and GDP data, and a US GDP reading. UK corporate results are due from Anglo American, Rentokil, Lloyds Banking Group, and Rolls-Royce.
