The FTSE 100 and European stocks were mixed this Wednesday after a speech from Federal Reserve chair Jerome Powell said little about the path forward for monetary policy.
The FTSE 100 (^FTSE) closed flat at 7,411 after a choppy session, while the CAC 40 (^FCHI) in Paris climbed 0.72% to 7,036 points. In Germany, the DAX (^GDAXI) bounced back and rose 0.50% to 15,227. The Stoxx 600 (STOXX) climbed 0.33% after starting the session in negative territory.
Powell said the US central bank must combine “intellectual rigour” with “flexibility and agility” in its forecasting as it faces economic surprises.
The Dow Jones (^DJI) slipped 0.10% to 34,122 points. The S&P 500 (^GSPC) was muted at 4,375 points and the tech-heavy NASDAQ (^IXIC) lost 0.15% to 13,120 points.
Yahoo Finance US write that words of caution from several hawkish members of the Fed have put a check on optimism that interest rates have peaked, sapping momentum from the rally in stocks. But 90% of traders are sticking with their bet there won’t be a hike this year, and 25% expect a rate cut in March, according to the CME FedWatch tool.
“The last two days have seen European markets struggle to build on the gains of last week, with some modest profit taking starting to kick in, even as investors start to price in the prospect of rate cuts as soon as next year,” said analyst Michael Hewson from CMC Markets.
“In the space of a week, we’ve gone from higher for longer back to rate cuts in 2024, and this time the push back from central bankers isn’t anywhere near as aggressive.”
In Asia, the Hang Seng (^HSI) in Hong Kong lost 0.43% to 17,593 while the Shanghai Composite (000001.SS) slipped 0.16% to 3,052 points. In Tokyo, the Nikkei 225 (^N225) also finished in the red, tumbling 0.33% to 32,166 points.
A Reuters poll showed Japanese manufacturers’ business confidence improved for the first time since August and service-sector mood rose for a second month, highlighting a challenging outlook amid a patchy economic recovery.
Read more: Interest rates: The UK banks that pay well, and those that don’t
Meanwhile, Brent crude (BZ=F) are trading lower after falling more than 4% on Tuesday as China’s exports dropped for a sixth straight month, underscoring a slowdown in global demand.
West Texas Intermediate (CL=F) is trading at $75.87 per barrel. Brent (BZ=F) crude futures lost 1.85% to $80.09 per barrel.
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US stock indexes have been subdued in premarket trading ahead of a speech by Federal Reserve chairman Jerome Powell which could offer more clarity on the direction for interest rates.
S&P 500(ES=F) futures hovered just above the flatline while Dow futures (YM=F) and Nasdaq futures (NQ=F) were basically muted.
Markets are now pricing in rate cuts as soon as in May, according to the CME Group’s FedWatch tool, with odds of a cut of at least 25 basis points having risen to nearly 52% compared to about 41pc a week ago.
Powell is set to give opening remarks before the Federal Reserve Division of Research and Statistics Centennial Conference at 14h15 London time.
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Bank of England governor Andrew Bailey said Threadneedle Street was still some way off from making a decision on a central bank digital currency, but called on lenders and the wider financial system to work together on the solution.
He told a conference in Dublin:
“We’re working on a central bank digital currency as well.
“We haven’t taken any decision and it will be a while before we make that decision.
“What I would say to the financial system, particularly the banks, is please don’t leave us as the only show in town.
“It’s not the right answer for the money system.
“We want to work with you on digital money and, out of that, we’ll decide what the next best steps are.”
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Facebook parent Meta (META) says it will require advertisers to disclose when they use AI to alter content in political ads. Yahoo Finance’s Daniel Howley writes:
According to Meta head of global affairs Nick Clegg, the new policy applies to Facebook and Instagram ads that use AI to make it appear as though a person is “saying or doing something they did not say or do,” create “a realistic-looking person that does not exist or a realistic-looking event that did not happen, or alter footage of a real event that happened.”
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Check out the latest investor updates on stocks that are trending on Wednesday.
Pub chain JD Wetherspoon has revealed a jump in sales over the past quarter. Photo: Daniel Leal/AFP via Getty
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Bank of England governor Andrew Bailey said he is “optimistic” that inflation will come back to the 2% target within two years, but that rates will likely need to stay high for longer to make that happen.
He told a conference in Dublin: “Policy is going have to be restrictive for an extended period to see the second half out, which is where policy is going to have to do the work to bring inflation back to target, and I believe it’s going to happen.
“Our forecast suggests we will be back at the target in around the two-year horizon.
“I’m optimistic. I think it will happen but I’m afraid we’ve got to continue doing the work to make it happen.”
Read more here.
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Marks & Spencer (MKS.L) shares have surged 9.6% to the top of the FTSE 100 (^FTSE) after the retailer announced its first dividend since 2019.
Profit before tax and adjusting items for the six months to the end of September came in at £360.2m — up from £205.5m in the same period last year. The performance was driven mostly by its food division, with total sales up by almost 11% at £6.2bn.
An interim dividend of 1p per share was proposed.
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Pub giant JD Wetherspoon (JDW.L) has revealed a jump in sales over the past quarter as it saw strong demand for its value-focused drink and food offer.
It comes as hospitality chains have reported resilient demand from customers despite the continued increase in the cost of living.
Wetherspoons, which runs 816 pubs across the UK, said it witnessed a 9.5% rise in like-for-like sales over the 14 weeks to 5 November.
Watch: Monetary policy is ‘most destructive force’ in world economy
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Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
