London close: Investors tread carefully ahead of Fed meeting
By Alexander Bueso
Date: Wednesday 29 Jan 2020
(Sharecast News) - London stocks traded just a touch higher on Wednesday as investors eyed the latest policy announcement from the Federal Reserve, with sentiment underpinned by solid quarterly results overnight from US technology giant Apple even as traders did their best to shrug off concerns about the new China coronavirus.
The FTSE 100 was up 0.04% at 7,483.57, while the second-tier index put on 0.17% to 21,468.99.
IG chief market analyst Chris Beauchamp said: "Investors continue to keep a nervous eye on China, but it looks like the beat on earnings from the tech giant [Apple] has helped yesterday's optimism to persist into a new session.
"There will be plenty to monitor in this evening's FOMC statement, including trade wars, impeachment, China and even perhaps Brexit, but for now investors will probably just be glad of a Fed remaining vigilant but quiet for now.
The Fed's policy announcement was due at at 1900 GMT, followed by a press conference with its chairman, Jerome Powell, scheduled for 1930 GMT.
In particular, investors were keen to see if the US central bank would modify its guidance for the purchase of $60.0bn of short-term government debt per month.
Some analysts believed that those purchases, which had restarted in October, had played a hand in the end-2019 risk rally, which meant that any changes could reverberate through financial markets.
And in the background, the World Health Organisation was reportedly considering announcing the new Chinese coronavirus a global emergency - possibly as soon as Thursday.
Nonetheless, citing the new coronavirus's lower mortality rate in comparison to the 2003 SARS epidemic and the quick actions taken by Beijing, Credit Suisse's Andrew Garthwaite believed that the impact of the contagion on global GDP would be limited.
"We believe the global economy will continue to recover, even if there is a near term 'pause'," he said.
On home turf, the latest survey from Nationwide showed that house prices grew more than expected in January, hitting a 14-month high.
Prices rose 1.9% on the year following a 1.4% increase in December, beating expectations of a 1.5% jump. This follows 12 consecutive months in which annual price growth had been below 1%.
On the month, prices were up 0.5% in January compared to a 0.1% rise the month before and expectations of 0.3% growth.
Nationwide chief economist Robert Gardner said: "The underlying pace of housing market activity has remained broadly stable, with the number of mortgages approved for house purchase continuing within the fairly narrow range prevailing over the past two years. Healthy labour market conditions and low borrowing costs appear to be offsetting the drag from the uncertain economic outlook.
"Looking ahead, economic developments will remain the key driver of housing market trends and house prices. Much will continue to depend on how quickly uncertainty about the UK's future trading relationships lifts, as well as the outlook for global growth. Overall, we expect the economy to continue to expand at a modest pace in 2020, with house prices remaining broadly flat over the next 12 months."
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said this was another positive housing market signal.
"Indicators of demand at the very start of the home-buying process are red hot. The new buyer enquiries balance of the RICS Residential Market Survey leaped in December to its highest level since January 2016. In addition, enquiries to estate agents in the month after the election were up 15% year-over-year in January, according to Rightmove, while asking prices posted the biggest month-to-month January gain since records begin in the early 2000s.
"We think the pick-up in demand can be sustained this year by the continuation of low mortgage rates and solid wage growth, driving prices up by about 4%."
In equity markets, 3i Group was a high riser after an upgrade to 'overweight' at Morgan Stanley, while Premier Inn owner Whitbread rallied on the back of an upgrade to 'buy' at HSBC.
Builders' merchant Travis Perkins was up after it reported "strong" fourth-quarter sales at Wickes and said plans to demerge the home improvement business this year were on track. The positive update helped to boost B&Q owner Kingfisher, which jumped to the top of the FTSE 100.
Low-cost airline Wizz Air flew higher after it lifted its full-year net profit guidance as it reported a record profit for the third quarter.
Quilter, formerly Old Mutual Wealth Management, topped gains on the second-tier index after a well-received fourth-quarter trading statement, in which it reported positive net flows.
McCarthy & Stone was under the cosh on news that private equity firm Anchorage Capital had placed 43m shares in the retirement housebuilder. According to terms seen by Bloomberg, the shares were being placed at 145p, with Goldman Sachs as bookrunner.
Avast was again weaker following reports earlier in the week by Vice and PCMag that the cybersecurity company has been spying on its users and selling their data.
Market Movers
FTSE 100 (UKX) 7,483.57 0.04%
FTSE 250 (MCX) 21,468.99 0.17%
techMARK (TASX) 4,249.14 0.39%
FTSE 100 - Risers
Rolls-Royce Holdings (RR.) 673.40p 3.44%
Melrose Industries (MRO) 246.90p 3.00%
Whitbread (WTB) 4,471.00p 2.78%
Ashtead Group (AHT) 2,592.00p 2.41%
Smith (DS) (SMDS) 357.00p 2.41%
Smurfit Kappa Group (SKG) 2,744.00p 2.08%
Mondi (MNDI) 1,616.00p 1.89%
Kingfisher (KGF) 207.80p 1.61%
United Utilities Group (UU.) 1,015.50p 1.55%
Royal Bank of Scotland Group (RBS) 220.90p 1.38%
FTSE 100 - Fallers
NMC Health (NMC) 1,318.00p -4.70%
Pearson (PSON) 573.60p -2.32%
Berkeley Group Holdings (The) (BKG) 5,242.00p -1.95%
Taylor Wimpey (TW.) 214.70p -1.56%
Sainsbury (J) (SBRY) 202.40p -1.51%
Hikma Pharmaceuticals (HIK) 1,914.00p -1.47%
Royal Dutch Shell 'B' (RDSB) 2,124.50p -1.39%
Unilever (ULVR) 4,438.00p -1.39%
TUI AG Reg Shs (DI) (TUI) 804.60p -1.37%
Polymetal International (POLY) 1,245.00p -1.27%
FTSE 250 - Risers
Quilter (QLT) 174.70p 8.88%
Crest Nicholson Holdings (CRST) 495.00p 4.74%
Wizz Air Holdings (WIZZ) 4,302.00p 4.67%
Virgin Money UK (VMUK) 178.75p 3.62%
Grafton Group Units (GFTU) 918.00p 3.38%
Just Group (JUST) 78.05p 3.31%
Man Group (EMG) 156.20p 3.07%
UDG Healthcare Public Limited Company (UDG) 814.00p 2.65%
TI Fluid Systems (TIFS) 239.50p 2.57%
SIG (SHI) 94.00p 2.23%
FTSE 250 - Fallers
Finablr (FIN) 90.05p -6.44%
Stagecoach Group (SGC) 133.20p -6.33%
Ascential (ASCL) 367.20p -6.04%
McCarthy & Stone (MCS) 146.60p -5.84%
Avast (AVST) 455.40p -5.48%
Softcat (SCT) 1,165.00p -3.56%
Equiniti Group (EQN) 210.00p -3.40%
Marston's (MARS) 104.00p -2.71%
Euromoney Institutional Investor (ERM) 1,256.00p -2.64%
Marks & Spencer Group (MKS) 179.45p -2.63%
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