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Wall Street flat despite Nvidia boost as FTSE 100 finishes in the red

FTSE  ATTENTION EDITORS - EMBARGOED TO 2301 GMT JULY 6, 2021     The Cambridge-1 supercomputer, which owner Nvidia Corp says is the United Kingdom's fastest supercomputer, is seen in Cambridge, Britain, in this undated handout photo obtained by Reuters. Courtesy of Nvidia Corp/Handout via REUTERS THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY. MANDATORY CREDIT
Wall Street's main stock indexes were flat despite an initial push as a strong sales forecast from Nvidia boosted chipmakers. The FTSE still finished in the red. Photo:Nvidia Corp/Handout via Reuters (Handout . / reuters)

The FTSE 100 and European stocks finished mixed this Thursday after the latest Federal Reserve minutes showed that the central bank remains steadfast in its determination to reduce inflation in the US.

The FTSE 100 (^FTSE) lost 0.23% to close at 7,912 points, while the CAC 40 (^FCHI) in Paris rose 0.34% to 7,324 points. In Germany, the DAX (^GDAXI) climbed 0.56% to 15,485.

Across the pond, US stocks scrambled firmly higher on Thursday as Wall Street looked to rebound from four consecutive days of declines for the S&P 500 as investors poured over minutes from the Federal Reserve's last meeting earlier this month for clues on its next move.

However, after a couple of hours of trading the sentiment changed with all indices flat. The Dow Jones (^DJI) was muted at 33,026 points. The S&P 500 (^GSPC) was treading water at 3,993 points and the tech-heavy NASDAQ (^IXIC) was flat at 11,497 as trading came to a close in Europe.

The latest readout from the Federal Reserve's 31 January to 1 February gathering indicated officials were intent on proceeding with "ongoing increases" but open to reaching an endpoint later this year.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, described the minutes as “hawkish.”

“They confirmed that the Federal Reserve (Fed) officials are indeed not lying when they say that they will continue hiking the interest rates to tame inflation toward the 2% mark.”

Read more: Bank of England's Mann: 'Too soon to stop interest rate increases'

“And the minutes show that they reckon it will take ‘some time’. How much time? We don’t know. Even they don’t know. But we know that the job is not done yet, and the next meeting’s 25bp increase won’t be the last one.

“We also know that most officials remain favourable for small increases ⁠— for longer. But some think that a 50bp hike would be appropriate. The odds for a 50bp hike for the March FOMC meeting now climbed to 24%.”

Jobless claims also added to worries that the Federal Reserve will keep raising interest rates for longer.

But Nvidia's (NVDA) strong sales offset Fed jitters with the chipmaker's shares rallying 12% after the company reported fourth quarter results late on Wednesday that beat analyst estimates, even as gaming revenue nearly halved from last year.

The company said it would partner with artificial-intelligence platforms amid a boom in interest for the technology, spurring optimism about its growth prospects.

Read more: BlackRock launches metaverse ETF despite lack of user adoption

Back in London, BAE Systems (BA.L) shares gained 0.31%, after an entire morning of dragging down Britain's blue-chip index.

The defence firm saw its order book jump to £37bn ($44.57bn) as governments upped defence spending amid the war in Ukraine.

Chief executive Charles Woodburn said it was "another year of strong results across the group" as it upped its dividend and boosted sales by 4.4% to £23.3bn.

Rolls-Royce (RR.L) surged by 22% after it said profit had grown as the business saw more of its plane engines take back to the skies as the airline industry recovers from COVID-19.

Rolls-Royce ⁠— which does not make the eponymous cars ⁠— said the company’s operating profit reached £837m last year, up from £513m the year before.

The business reported that the number of hours that its large engines flew during the year grew by 35%.

It also reported that pre-tax loss hit £1.5bn up from a loss of £294m the year before. On an underlying basis the business made a pre-tax profit of £206m, up from £36m a year earlier.

The new boss of Rolls-Royce has promised "materially higher profit, cash flow and returns" as he announced a strategic review into the engineering giant.

Charlie Huggins, head of equities at Wealth Club, said: “It’s not uncommon for a new CEO to do some kitchen sinking. But when the incoming leader describes the existing business as a ‘burning platform’ you know you have serious issues.

Read more: More than six in 10 businesses planning on raising prices to cope with inflation

"‘Every investment we make we destroy value’, according to new CEO, Tufan Erginbilgic. Based on Rolls-Royce’s performance over the last decade it’s hard to disagree."

Joshua Warner, City Index analyst, said the company “blew past” estimates.

“The early results from the turnaround plan and honest language from Erginbilgic should give Rolls-Royce investors confidence that this will be a significant shake-up of the 117-year-old company, which has limped from one restructuring to the next over recent decades,” he said.

Meanwhile, Brent crude (BZ=F) bounced back and was trading at around $82 per barrel on expectations that Russia will cut its oil exports more than previously announced.

In Asia, Tokyo’s Nikkei 225 (^N225) lost 1.34% to 27,104 points, while the Hang Seng (^HSI) in Hong Kong gained 0.18% to 20,386. The Shanghai Composite (000001.SS) slipped 0.11% to 3,287 points.

Watch: Fed minutes show most members approve 25bps rate hike

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