London open: FTSE rallies after bumper US rate cut; BoE in focus
By Michele Maatouk
Date: Thursday 19 Sep 2024
(Sharecast News) - London stocks rallied in early trade on Thursday as investors mulled a bumper rate cut from the US Federal Reserve and eyed the latest policy announcement from the Bank of England.
At 0830 BST, the FTSE 100 was up 0.9% at 8,325.46.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: "The FTSE 100 has opened 0.9% higher as investors digest the US rate pivot and look to the Bank of England for signals as to how the rest of the year might play out at home. Yesterday's inflation print isn't likely to have a major impact on today's decision, with the headline jump in services inflation due to volatile airfares. Still, slow and steady wins the race, and the general expectation is that rates will be held steady at 5%, following the narrow 5-4 vote to cut back in August.
"Looking across the pond, the Fed opted to go big yesterday and cut rates for the first time in four years by a bumper 0.50% - perhaps a sign that there was a slight feeling that they missed the boat last time around. But US markets ended up trading lower yesterday after the initial excitement, and a brief all-time high on the S&P 500, was quelled by more hawkish comments from Fed Chair Jay Powell in his press speech. Though, if we look at futures markets, trading suggests that those highs could be tested again when markets open this afternoon.
"There are two key takeaways here. The first is that the cutting cycle has begun, which should be supportive of growth and equity prices, especially small caps. The second is a potential shift in priority for the US central bank. No longer pursuing the (arguably arbitrary) 2% inflation target at all costs, there seems to be a pivot toward economic growth. The Fed's mettle will be tested in the coming quarters as inflation measures like CPI look likely to remain volatile over the short term."
In equity markets, Next jumped to the top of the FTSE 100 after the clothing retailer once again upgraded annual earnings guidance as full price sales in the first six weeks of the second half of the year "materially exceeded" expectations, rising 6.9%.
It lifted 2024/25 pre-tax profits forecasts £15m to £995m, up 8.4% on last year, after interim profits for the six months to July surged 7.1% to £452m.
Equipment rental firm Ashtead was also a high riser after an initiation at 'buy' by Berenberg.
Online grocer and logistics group Ocado surged after it upgraded its revenue guidance for Ocado Retail - its joint venture with Marks & Spencer - following a strong third-quarter performance which saw retail revenues jump 15.5%.
The company is now targeting low double-digit percentage growth in sales over the year to 3 December, from the £2.8bn generated last year. That's up from earlier guidance for mid-high single-digit growth given in July.
Marks & Spencer also gained on the news.
Close Brothers rose after saying it had agreed to sell its wealth management arm for up to £200m to funds managed by Oaktree Capital Management and as it released in-line full-year results.
Bytes Technology was in the black as it said trading has remained strong since it updated the market at its annual meeting in July.
IG Group and Drax were both lower as they traded without entitlement to the dividend.
Market Movers
FTSE 100 (UKX) 8,325.46 0.87%
FTSE 250 (MCX) 21,004.82 0.81%
techMARK (TASX) 4,855.54 0.67%
FTSE 100 - Risers
Next (NXT) 10,940.00p 5.85%
Ashtead Group (AHT) 5,702.00p 2.92%
Anglo American (AAL) 2,180.00p 2.66%
JD Sports Fashion (JD.) 153.90p 2.46%
Burberry Group (BRBY) 623.00p 2.43%
Prudential (PRU) 646.20p 2.25%
Glencore (GLEN) 388.25p 2.21%
Frasers Group (FRAS) 883.50p 2.14%
Fresnillo (FRES) 575.00p 2.13%
Rio Tinto (RIO) 4,865.50p 2.10%
FTSE 100 - Fallers
Unite Group (UTG) 962.50p -0.57%
British American Tobacco (BATS) 2,855.00p -0.45%
Darktrace (DARK) 582.00p -0.27%
Vodafone Group (VOD) 77.90p -0.23%
National Grid (NG.) 1,048.50p -0.19%
Haleon (HLN) 396.30p -0.13%
Compass Group (CPG) 2,431.00p -0.12%
SSE (SSE) 1,995.00p -0.08%
GSK (GSK) 1,603.50p -0.03%
RELX FINANCE BV 3.375% GTD NTS 20/03/33 (BW73) 99.72p 0.00%
FTSE 250 - Risers
Ocado Group (OCDO) 401.40p 14.82%
NCC Group (NCC) 178.00p 4.83%
Close Brothers Group (CBG) 551.00p 4.45%
Bytes Technology Group (BYIT) 491.80p 3.62%
NB Private Equity Partners Ltd. (NBPE) 1,580.00p 3.54%
Indivior (INDV) 746.50p 2.89%
Apax Global Alpha Limited (APAX) 145.00p 2.69%
JTC (JTC) 1,048.00p 2.54%
Wood Group (John) (WG.) 132.00p 2.48%
Tate & Lyle (TATE) 682.00p 2.48%
FTSE 250 - Fallers
IG Group Holdings (IGG) 923.00p -2.53%
Bodycote (BOY) 602.00p -2.27%
Foresight Group Holdings Limited NPV (FSG) 518.00p -2.26%
RHI Magnesita N.V. (DI) (RHIM) 3,195.00p -1.99%
Clarkson (CKN) 3,660.00p -1.61%
Paragon Banking Group (PAG) 735.00p -1.28%
Energean (ENOG) 896.00p -1.05%
Drax Group (DRX) 635.00p -0.94%
Edinburgh Worldwide Inv Trust (EWI) 148.20p -0.80%
Asia Dragon Trust (DGN) 393.00p -0.76%
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