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FTSE 100 and European markets close on high but US stocks tepid as Nvidia leads gains

A screen tracks NVIDIA Corp. as a trader works on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., October 23, 2023.  REUTERS/Brendan McDermid
A screen tracks NVIDIA Corp as a trader works on the floor at the New York Stock Exchange. (Reuters / Reuters)

The FTSE 100 and European stocks were in the green on Thursday as the Bank of England held interest rates at a 16-year high. Markets in London have been buoyant since new data on Wednesday showed that inflation returned to the target rate of 2% in May – the first time it has hit Threadneedle Street's target since July 2021.

  • The FTSE 100 (^FTSE) rose 0.8%, while the DAX (^GDAXI) was up 0.9% and the CAC (^FCHI) headed 1.3% higher.

  • The pan-European STOXX 600 (^STOXX) was 0.9% in the green.

  • Across the pond, the S&P 500 (^GSPC) pointed up around 0.1% following the one-day break, after the index closed Tuesday's session by securing its 31st record close of the year. The tech-heavy Nasdaq Composite (^IXIC) was almost flat. The Dow Jones Industrial Average (^DJI) edged up a modest 0.2%.

  • After a holiday break on Wednesday, Wall Street looked set to continue its winning ways in 2024. Stocks' growth story this year has been largely driven by the excitement around AI's potential, and no company has captured the collective attention like Nvidia. Its stock was up more than 2.2% in early trade. It's up more than 170% so far this year.

  • While the UK held its interest rates, traders continue to bet on a Fed cut by September, according to the CME FedWatch tool. Initial unemployment claims released on Thursday showed dipped to 238,000 versus a consensus expectation of 235,000.

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  • Dow rallies as Nasdaq consolidates

    Some commentary from Chris Beauchamp, chief market analyst at online trading platform IG:

    “The Nasdaq 100’s ascent has paused for now following its move to 20,000, but instead the lagging Dow Jones has made headway in early US trading this afternoon. Broadening participation in the rally would be a major boost for investors, who have fretted about the sustainability of the rally, given that it was big tech that was making all the running.”

  • Dell shares pop at the open

    Shares in Dell Technologies were higher after it CEO Michael Dell announced a partnership with Nvidia (NVDA) to construct an AI Factory designed to boost the capabilities of Grok, an AI model developed by Elon Musk's company, xAI.

    Musk has told investors that his artificial intelligence startup xAI is planning to build a supercomputer to power the next version of its AI chatbot Grok, according to a report by the Information in May.

    The stock also got a boost this week after Morgan Stanley reiterated its Overweight rating on the computer company, emphasising its status as a top pick for 2024 by the firm.

  • How US stocks are faring as markets open

  • A BoE view from the housing market

    John Fraser-Tucker, head of mortgages at Mojo Mortgages said:

    The housing policies of the elected government are likely to impact the outlook for the base rate going forward. Labour’s manifesto seems to focus more so on first-time buyers as they’ve stated that they’ll make the existing mortgage guarantee scheme permanent under the name “Freedom to Buy”. They have also claimed that they’ll help over 80,000 young people get onto the housing ladder over the next 5 years. Comparatively, the Conservatives have focused on policies that they believe will bring down mortgage costs.

    Given the contrasting focuses, it makes sense for the BoE to wait and see which government is elected before lowering the base rate, otherwise it could add more uncertainty to the mortgage market right now.

  • MPC vote split shows support for cut

    Two policymakers Two policymakers again voted to cut rates to 5%. Swati Dhingra and Dave Ramsden were outvoted 7-2 on the decision to cut.

    The hold is down to expectations that energy prices will begin to ramp up again later this year, meaning overall CPI will go up.

  • Rate cut may not be in play until September

    Liz Edwards, money expert at personal finance comparison site shares her thoughts:

    Previously experts were confident in forecasting a rate cut for June or August, but it now looks as though this may not happen until as late as September. Although the BoE has finally reached its 2% inflation target, the challenge will be bringing the base rate down without triggering an inflationary spike. In order to avoid this, the BoE will no doubt be cautious when it comes to rate cuts."

  • Bank of England holds rates at 16-year high

    As expected, the Bank of England has held firm on its base interest rate, holding it at 5.25% for the seventh consecutive time.

    The move by Threadneedle Street's monetary policy committee comes two weeks before Britons head to the polls to decide the next government.

    Inflation fell back to 2% in May but persistent price rises in the services sector, key to understanding domestic price pressures in the country’s services-oriented economy, raised concern among members of the MPC.

    Economists noted it was unlikely that the Bank of England would be willing to start cutting interest rates in the middle of an election campaign.

  • Two arrested in £1bn London crypto crackdown

    The FCA says it worked with the Met Police in London on the arrest of two individuals suspected of running an unregistered crypto business in the UK. The business is said to have exchanged around £1bn in cryptoassets.

    The FCA inspected the offices associated with the suspects and the police seized several digital devices during searches of two residential London properties.

    Both suspects were interviewed under caution by the FCA and released on bail. The FCA’s investigation into the case is ongoing.

    Cryptoasset exchange providers must be registered with the FCA and comply with the UK money laundering regulations in order to operate legally in the UK.

  • Characterisation of Truss' budget long-term fallout not 'fair': Hunt

    British Chancellor of the Exchequer Jeremy Hunt walks into Number 10 Downing Street in London, Britain, March 18, 2024. REUTERS/Toby Melville
    British Chancellor of the Exchequer Jeremy Hunt walks into Number 10 Downing Street in London, Britain, March 18, 2024. REUTERS/Toby Melville (REUTERS / Reuters)

    Chancellor Jeremy Hunt has said of Liz Truss's disastrous mini budget that it is not "fair" to say it caused “sustained economic scarring”.

    Speaking at The Times CEO summit, he said his call up to be Chancellor was one of the most dramatic weeks of his life, adding: "I think if you look at us now with lower inflation, higher growth than most major economies we’re actually doing very well.”

    PA reporting

  • FCA to target trading app gamification

    The UK's Financial Conduct Authority (FCA) said today that it will keep the practices of trading apps under review, after research showed that using things like push notifications and prize draws potentially has an outsize detrimental effect on consumers behaviour.

    These practices increased the likelihood of taking risky bets, the regulator said, particularly in some subgroups, including those with low financial literacy, women and younger participants (18-34).

    “Trading apps have the potential to transform retail investments, but some in-app features might be pushing consumers towards more frequent or riskier trading, which isn’t right for everyone," said Sheldon Mills, executive director of consumers and competition at the FCA.

  • YouGov loses third of value

    YouGov shares have plummeted this morning following a shock profit warning for the year.

    This is down to weak sales in its data products division, and challenges in the European, Middle East and African markets, it said.

  • Sainsbury's x NatWest

    Sainsbury’s has struck a deal to sell its banking business to lender NatWest.

    The supermarket has agreed to pay the state-owned lender £125m to take on the assets, which include about one million customer accounts.

    The deal will see NatWest take on about one million customer accounts, as well as £1.4bn of unsecured personal loans, £1.1bn of credit card balances and about £2.6bn of customer deposits.

    Sainsbury's said customers would "not need to take any action" and said there would be no immediate changes to their terms and conditions. The deal is expected to complete in the first half of next year.

    Read more: Trending tickers: latest investor updates on Nvidia, Constellation, Dell and NatWest

  • Pound cautious ahead of MPC decision

    The pound is making some small moves today, with traders behaving cautiously, sending it slightly lower against the dollar. Earlier in the week it was closer to $1.28, but it's now firmly hovering around $1.27, down about 0.1%.

    Sterling gained on Wednesday after the inflation print.

  • BoE 'not quite there' on rates

    Lots of similar comments coming through on the potential rate path this morning. Here's PwC's chief economist Barret Kupelian:

    “With headline inflation hitting its target rate, the Bank’s Monetary Policy Committee is nudging closer to cut its policy rate. The tide is clearly turning, but we still feel that the Bank is not quite there yet. Services inflation continues to remain significantly above its own projections (5.7% vs 5.3%), in part due to a tight labour market and also because of erratic factors.

    “The Bank is therefore likely to keep interest rates unchanged today.

    “The Monetary Policy Committee will next meet in August, armed with a new set of forecasts and an additional inflation reading, which will help clarify its thinking on how to proceed. Assuming no surprises, we think the Bank will cut rates in August."

  • Swiss National Bank cuts rates

    More news on rates this morning: the Swiss central bank has cut its policy rate by 25bps.

  • Overnight in Asia

    Asian markets were mixed on Thursday, following a bullish start led by tech stocks. The moves come as China's central bank kept its one-year lending benchmark rate on hold at 3.45%. It also held the five-year prime rate at 3.95%.

    The one-year rate guides the majority of corporate and household loans, while the five-year steers real estate debt.

    The Hang Seng (^HSI) in Hong Kong fell 0.6%, while the SSE Composite (000001.SS) was down 0.4%. The Nikkei (^N225) in Japan ticked up 0.

  • US trade on Wednesday

    US markets were closed on Wednesday for the Juneteenth holiday. Major indexes closed Tuesday cautiously higher, and futures contracts are pointing to a higher open later on.

  • Good morning!

    Hello from London. It's a big week in the UK with the inflation print yesterday, and interest rates day today. We should get some news from the Bank of England around 12..

    Later on there's unemployment data from the US and consumer confidence readings from the EU.

    Let's get to it.

Watch: UK inflation hits 2% target for first time since 2021