London close: Stocks manage gains ahead of Fed decision
By Josh White
Date: Wednesday 19 Mar 2025
(Sharecast News) - London's financial markets showed modest gains by the close on Wednesday, with investors digesting the Bank of Japan's recent policy decision and anticipating the upcoming announcement from the US Federal Reserve.
The FTSE 100 index edged up by 0.02% to close at 8,706.66, while the FTSE 250 saw a slightly higher increase of 0.12%, ending at 20,122.37.
In currency markets, sterling was last down 0.21% on the dollar to trade at $1.2974, while it strengthened 0.35% against the euro, changing hands at €1.1920.
"The FTSE 100 is trading near the flatline on Wednesday after five consecutive days of gains, as investors tread cautiously ahead of the Federal Reserve's interest rate decision later today," noted TickMill market strategy partner Patrick Munnelly.
"In a week dominated by central bank meetings, the Fed's policy announcement takes centre stage.
"The central bank is widely expected to hold interest rates steady, with any hints of future rate cuts to support economic growth being closely scrutinised."
Munnelly added that the Bank of England was also expected to leave its rate unchanged on Thursday, while market expectations suggested at least two rate cuts from both the Fed and the BoE by the end of the year.
"This morning's Financial Times reported that the UK chancellor plans a 'multibillion-pound public spending squeeze' in next week's Spring Statement, alongside £5bn annual welfare savings by 2029-2030.
"This aligns with our preview, which estimates £15bn in savings is needed by 2029-2030 to maintain the £10bn fiscal rule headroom set last October.
"Likely measures include: £5bn welfare cuts, departmental spending reductions, and reallocating funds from international aid to defence, with some defence spending on capital excluded from fiscal headroom calculations."
Bank of Japan maintains interest rates as investors turn to Fed
With no significant domestic economic data released in the UK on Wednesday, investors were focused on global developments, particularly central bank decisions and their potential impact on financial markets.
The Bank of Japan kept its benchmark interest rate unchanged at 0.5%, in line with market expectations.
The decision, made unanimously at the central bank's two-day policy meeting, came amid persistent economic uncertainties.
In its statement, the BoJ cited various risks, including global trade conditions, commodity prices, and domestic wage and price trends.
It also highlighted that recent shifts in corporate pricing and wage policies could make exchange rate movements more influential on inflation.
Marcel Thieliant, head of Asia-Pacific at Capital Economics, said the BoJ's decision to leave policy settings unchanged was widely anticipated, but added that he still thought the tightening cycle had much further to run.
"After having lifted its policy rate to 0.5% in January and having provided no signals of further tightening today, it came as no surprise that the Bank didn't hike rates further," he said.
"The short statement was unchanged relative to January except for the Bank's assessment of risks.
"We still think there's a decent chance of a rate hike at the Bank's May meeting."
In the United States, mortgage applications declined last week after a period of strong growth, as borrowing costs edged higher.
According to the Mortgage Bankers Association, applications fell 6.2% in the week ended 14 March, following sharp increases in the preceding two weeks.
The rise in long-term Treasury yields led to the first increase in 30-year fixed mortgage rates in over two months, climbing to 6.72% from 6.67% the previous week.
Despite the decline in refinancing activity, mortgage applications for home purchases rose to their highest level in six weeks.
"Overall, purchase application volume is up 6% compared to last year at this time," said Mike Fratantoni, the MBA's senior vice president and chief economist.
"Growing inventories of homes on the market and steadier mortgage rates are supporting homebuying activity thus far this spring."
Softcat surges, Ferrexpo sinks despite revenue rise
On London's equity markets, shares in M&G advanced 1.99% after the savings and investments firm posted stronger-than-expected 2023 results.
The company reported significant increases in net client flows, adjusted profits, and operating capital generation compared to the previous year, surpassing analysts' forecasts.
Softcat surged 10.91% after the IT services provider raised its expectations for 2025 operating profit growth.
The upbeat outlook followed a 12% rise in interim earnings, boosting investor confidence in the company's financial trajectory.
On the downside, Compass Group fell 4.76% after BNP Paribas Exane downgraded the catering firm's rating from 'outperform' to 'underperform', weighing on its share price.
Ferrexpo declined 5.64% after the iron ore producer accused Ukraine of breaching international investment agreements.
Despite reporting a 66% surge in production and a 43% rise in revenue for 2024, the company's underlying earnings fell 30% due to lower iron ore prices and higher costs.
The firm posted a pre-tax loss of $20.4m, though that marked an improvement from the prior year's $68.4m loss.
Elsewhere, Essentra dropped 5.88% as investors reacted to its cautious outlook on market conditions.
While the company confirmed its full-year performance remained in line with expectations, it warned of uncertainty regarding the timing of any material recovery in demand.
QinetiQ Group declined 4.1% after Berenberg lowered its price target on the defense contractor from 610p to 500p, reflecting a reduction in earnings estimates.
However, the broker maintained a 'buy' rating on the stock.
Reporting by Josh White for Sharecast.com.
Market Movers
FTSE 100 (UKX) 8,706.66 0.02%
FTSE 250 (MCX) 20,122.37 0.12%
techMARK (TASX) 4,767.77 -0.24%
FTSE 100 - Risers
Games Workshop Group (GAW) 14,630.00p 2.74%
CRH (CDI) (CRH) 7,558.00p 2.27%
Smurfit Westrock (DI) (SWR) 3,543.00p 2.16%
JD Sports Fashion (JD.) 79.62p 2.16%
Informa (INF) 786.00p 2.13%
Melrose Industries (MRO) 540.60p 2.00%
M&G (MNG) 225.60p 1.99%
Rentokil Initial (RTO) 339.30p 1.80%
Hiscox Limited (DI) (HSX) 1,157.00p 1.76%
Shell (SHEL) 2,741.00p 1.67%
FTSE 100 - Fallers
Compass Group (CPG) 2,500.00p -4.76%
Croda International (CRDA) 3,017.00p -2.61%
Diageo (DGE) 2,035.50p -2.14%
GSK (GSK) 1,505.00p -1.73%
Schroders (SDR) 380.40p -1.60%
IMI (IMI) 2,004.00p -1.57%
Smith & Nephew (SN.) 1,088.50p -1.49%
Tesco (TSCO) 321.30p -1.47%
Glencore (GLEN) 315.05p -1.27%
Admiral Group (ADM) 2,973.00p -1.23%
FTSE 250 - Risers
Softcat (SCT) 1,741.00p 7.27%
Savills (SVS) 976.00p 3.83%
Marshalls (MSLH) 247.00p 3.35%
Bridgepoint Group (Reg S) (BPT) 330.40p 2.99%
Carnival (CCL) 1,440.00p 2.93%
Volution Group (FAN) 579.00p 2.48%
GCP Infrastructure Investments Ltd (GCP) 78.00p 2.23%
Morgan Sindall Group (MGNS) 3,010.00p 2.21%
Baltic Classifieds Group (BCG) 316.50p 2.10%
Discoverie Group (DSCV) 587.00p 2.09%
FTSE 250 - Fallers
Essentra (ESNT) 108.80p -5.88%
Ferrexpo (FXPO) 77.00p -5.64%
Wizz Air Holdings (WIZZ) 1,688.00p -4.95%
Oxford Nanopore Technologies (ONT) 109.80p -4.52%
Energean (ENOG) 840.50p -4.11%
QinetiQ Group (QQ.) 379.20p -4.10%
Trustpilot Group (TRST) 241.00p -2.82%
Burberry Group (BRBY) 882.80p -2.80%
Hays (HAS) 86.35p -2.26%
B&M European Value Retail S.A. (DI) (BME) 269.30p -2.25%
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