Yahoo Finance FTSE 100 closes in the red as Wall Street bounces back
The FTSE 100 and European stocks were mixed as mounting energy and inflation troubles fuel fears of a recession.
The FTSE 100 (^FTSE) slipped 0.14% to 7,477 at close, while the CAC (^FCHI) in Paris advanced 0.50% to 6,393. The DAX (^GDAXI) in Germany gained 0.29% to 13,231.
Wall Street's main indexes slipped at the open as recent economic data fuelled fears of a slowdown ahead of the US Federal Reserve's annual conference this week but managed to bounce back.
The Dow Jones (^DJI) was up 0.43% to 33,052. The S&P 500 (^GSPC) gained 0.57% to 4,152 points and the tech-heavy Nasdaq (^IXIC) advanced 0.84% to 12,481 as the closing bell rang across Europe.
US data showing that pending home sales fell 1.0% in July, better than the consensus for a 2.8% decline, helped Wall Street bounce back.
London’s blue-chip index was pulled down by financial companies and miners.
HSBC (HSBA.L) was the biggest drag, shedding 1.58% after Chinese shareholder Ping An defended its call to spin off HSBC's Asia business.
Rio Tinto (RIO.L), Anglo American (AAL.L) and Glencore (GLEN.L) were all in the red as miners lost ground. British American Tobacco (BATS.L) bucked the trend, gaining 0.7%.
Shares in FTSE 100 company Aveva (AVV.L) surged 36% after a French industrial conglomerate said it was considering buying out the software firm.
The French conglomerate on Wednesday said it was looking into buying the remaining 40% of Aveva that it does not already own. No proposal had yet been put to Aveva shareholders, Schneider said in a statement, “and there can be no certainty that any offer will be made, nor as to the terms on which any offer will be made”.
Attentions now turns to tomorrow’s start of the Jackson Hole economic symposium in Wyoming, with Federal Reserve chairman Jerome Powell due to make comments on US monetary policy on Friday.
Richard Hunter, head of markets at interactive investor, said: “With investors for the most part sitting on their hands ahead of the imminent Jackson Hole symposium, markets failed to make much progress.
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“The changing narrative among investors is that even if the Fed succeeds in engineering a soft landing for the US economy, rates could remain at elevated levels for longer, and until such time as the battle with inflation has been beaten beyond a doubt.”
Neil Wilson, chief market analyst at markets.com, reiterated that all eyes are on Powell.
He said: "All anyone is really talking about is Jackson Hole and what Jay Powell says...it’s hard to see him doing anything different – underling the case to fight inflation, that policy rates will need to stay restrictive for longer etc... quite how the market reads it is anyone’s guess. But the market, as evidenced by nominal Treasury yields and breakevens, is still under-appreciative of just how much inflation-busting is required."
Meanwhile, Brent crude (BZ=F) is back at $100/barrel for the first time in over a week last night, after Saudi Arabia dropped a heavy hint that the Opec group could cut production.
Brent crude back above $100/bbl.
Thank your local OPEC representative. pic.twitter.com/08MRasxFqq— Rory Johnston (@Rory_Johnston) August 23, 2022
David Madden, market analyst at Equiti Capital, suggests any Opec move could depend on the progress of nuclear talks with Iran.
He said: “WTI and Brent crude are powering ahead as OPEC+ announced that it might consider cutting oil production, if or when, Iran boosts its output.
“Western governments are engaging in talks with Iran about its nuclear programme, it is understood that little progress has been made, so OPEC might not be forced to act.”
In Asia, Tokyo’s Nikkei 225 (^N225) lost 0.49% to finish at 28,313 while the Hang Seng (^HSI) in Hong Kong fell 1.19% to 19,270. The Shanghai Composite (000001.SS) also finished in the red, slipping 1.85% to close at 3,215 points. The latest market slide comes as investors grapple with uncertainty over when the highest inflation in decades will ease significantly.
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Watch: What is a recession and how do we spot one?
