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FTSE 100 Live: Wall Street futures positive ahead of Fed, British Airways-owner IAG leads travel rebound

·10-min read
 (ESI)
(ESI)

Market jitters over the path to higher interest rates will be addressed later when the US Federal Reserve holds its latest meeting.

The central bank is expected to signal its plans for tightening monetary policy, starting with a first hike in interest rates in March.

London shares are sharply higher in advance of the meeting, despite Wall Street enduring another volatile session and Microsoft falling 3% following the release of quarterly results. The tech giant generated almost $52 billion (£38.5 billion) in revenues, driven by growth in its cloud computing operations.

FTSE 100 Live Wednesday

  • IAG shares surge, FTSE 100 higher

  • US Federal Reserve to signal rates outlook

  • Microsoft posts big jump in profits

FTSE and Wall Street firmly in the green

14:42 , Oscar Williams-Grut

Stocks are back in vogue - at least for now.

The FTSE 100 is up 1.8% at the time of writing, near enough the highest its been all day. It’s being helped by a positive open on Wall Street: the Nasdaq is up 1.9% shortly after the open and the S&P is 1.2% higher.

Wall Street set to open higher and bitcoin rebounds

13:25 , Oscar Williams-Grut

Wild trading continues in the US: after sinking yesterday, Wall Street looks set for a big bounce when stock markets open in a little over an hour.

Nasdaq futures are up over 2%, meaning the index is set to erase all of yesterday’s gains. Other markets are tracking similar movements.

The volatile trading comes ahead of the US Federal Reserve’s latest interest rate decision later today, which is due at 10pm UK time.

Victoria Scholar, head of investment at interactive investor, says: “At today’s meeting, the Fed is likely to signal plans to begin raising rates in March and to end its quantitative easing stimulus programme this quarter.

“This year’s sell-off in US indices has largely priced in the tightening path ahead with the potential for stocks to stabilise from here. Fed Chair Powell, who has been described as ‘Goldilocks in a suit’, will be treading a fine line, neither too hawkish nor too dovish, displaying credibility in the fight against inflation without spooking the current precarious market mood.”

Elsewhere, bitcoin is benefiting from the rebound on Wall Street. The world’s biggest cryptocurrency is up 3.5% to trade at $37,781 at typing time - still not far off half its all-time high reached just two months ago.

13:12 , Oscar Williams-Grut

The pandemic pet boom will lead to record sales and profits for Pets At Home, says chief executive Peter Pritchard.

Sales in the quarter to the end of December jumped 8.7% on a year ago – compared to 2019 they are up 28%.

The business now has 445 stores and a further 300 vet and grooming outlets.

Pritchard says it was a “very busy” Christmas – they groomed 5500 dogs on Christmas Eve alone.

Read more here

Citi invests £100 million in office overhaul

11:22 , Oscar Williams-Grut

US investment bank Citi has announced a blockbuster, multi-year plan to overhaul its £1 billion Canary Wharf headquarters as it adapts to new ways of working and goes green.

Citi, which employs 9,000 people in London, today announced a major refurbishment of its 42-story office tower at 25 Canada Square, which it bought for a reported £1 billion in 2019. The block is to be totally overhauled in a project set for completion by 2025. It will cost upwards of £100 million and will be one of the biggest office refurbishments in Europe.

The refurbishment is a major vote of confidence in London’s future as a global financial hub post-Brexit and in the future of the office post-pandemic. Some commentators had suggested the rise of flexible working could be the death knell for offices.

Read the full story.

IAG leads travel sector rebound

10:30 , Graeme Evans

A holiday mood swept through the London market today as investors bet on airline, hotel and travel stocks finally being over the worst of the Covid pandemic.

An expected surge in bookings for skiing trips and other half-term jaunts as travel restrictions are lifted for fully-vaccinated travellers meant shares in British Airways owner IAG led the FTSE 100 index with a jump of 7%.

There have been plenty of false dawns in recent months and today's rise of 10.7p to 158.7p only takes IAG back to where it was before this week's stock market volatility. But the airline is 25% higher than 2021's low point seen in mid-December.

AJ Bell investment director Russ Mould said a calmer session has encouraged investors to look for stocks and sectors that have potentially been oversold.

He added: “The sector’s recovery won’t be easy, given oil prices are high which means equally high fuel costs. Then there is the great unknown – will airlines go for all-out price war to fill planes in the important summer period?”

Hotels chain InterContinental joined IAG on the risers board with a gain of 213p to 4928p, while low-cost carrier easyJet rallied 5% or 29.6p to 633.4p in the FTSE 250 index. Package holidays business Jet2 lifted 74p to 1287.5p and TUI improved 14.7p to 260.7p.

The positive mood also benefited commodity and financial stocks as the FTSE 100 index continue its outperformance to jump 1.7% or 125.84 points to 7497.29.

A shortened fallers board included Royal Mail, which dipped 2.9p to 439.4p after Liberum cut its target price. An in-line update from accounting and payroll software business Sage failed to benefit its shares, which declined 3% or 25.8p to 736.6p.

The FTSE 250 index rebounded 387.74 points to 22,033.55 but online gaming firm Playtech fell 13.5p to 628p ahead of next week's vote on a £2.7 billion takeover by an Australian bidder.

All-Share stock Bloomsbury Publishing jumped 10% or 34p to 364p after it said profits will be materially ahead of market expectations for the year to February 28.

IG Design Group, whose Tom Smith brand holds the Royal Warrant for the supply of Christmas crackers and wrapping paper, fell 54% on AIM after a profits warning triggered by supply and cost challenges in the US.

Paul Fineman, chief executive of the crafting, gifting and stationery business, said: "To say that I and the whole board are disappointed with our financial performance over the FY22 to date is a huge understatement.”

Pandemic disruption hits Fresnillo outlook

09:03 , Graeme Evans

Shares in silver and gold miner Fresnillo are down 11% in the FTSE 100 index after it downgraded 2022 production guidance due to Mexico's worsening Covid-19 situation.

New labour laws limiting the use of contractors have added to its difficulties, sending shares down 90.2p to 714.8p despite gold production in 2021 being ahead of expectations.

IG Design, whose Tom Smith brand holds the Royal Warrant for the supply of Christmas crackers and Christmas wrapping paper, fell 53% on AIM after a profits warning triggered by supply and cost challenges in the US.

Chief executive Paul Fineman said: "To say that I and the whole board are disappointed with our financial performance over the FY22 to date is a huge understatement.”

The gifts and stationery group, whose products are found in US retail outlets including Walmart and Target, fell 134.5p to 120.5p as it said there will be no final dividend in the current year.

On a brighter note, Pets at Home shares were 4% or 15.8p higher at 433.8p after the retailer delivered a further upgrade to profit guidance.

FTSE’s defensive qualities pay off

08:18 , Graeme Evans

London's limited exposure to big tech has helped the FTSE 100 index to weather the current stock market storm, with the top flight today up another 64.85 points to 7436.31.

It remains marginally ahead for the year, whereas the Nasdaq 100 is more than 13% lower.

Richard Hunter, head of markets at Interactive Investor, said oil price strength and tighter monetary conditions made the FTSE 100 something of a defensive play for investors.

He said: “Both oil and bank sectors are adequately represented within the index and, allied to a raft of mature companies with varying degrees of pricing power, there is an element of inflation-proofing built in.

“At the same time, the valuation of the index remains undemanding compared to global peers, while the average dividend yield is also high compared to other key markets.”

Wizz Air recovery knocked by Omicron

08:15 , Oscar Williams-Grut

Wizz Air has seen its losses soar in recent months after the emergence of Omicron derailed a hoped-for recovery in air travel.

The budget carrier lost €267.5 million in the three months to 31 December, 130% higher than the same period a year earlier.

Higher losses came despite a recovery in passenger numbers. Wizz Air flew 7.7 million in the third quarter of its financial year, up from just 2.2 million 12 months earlier. Revenue rose 172% to €408 million in the period.

The Hungarian airline has been ramping up its capacity in anticipation of a return to more normal levels of demand this year. That left it with higher costs when the Omicron wave hit and bought a halt to much international travel. Wizz Air also slashed ticket prices over Christmas in a bid to boost demand.

Read the full story.

Microsoft profits rise 24% but shares fall

07:56 , Graeme Evans

Microsoft's impressive second quarter results failed to prevent its shares falling more than 3% in after-hours trading on Wall Street.

Revenues rose 20% to $51.7 billion (£38.3 billion) and operating profit lifted 24% to $22.2 billion (£16.4 billion), despite a 17.5% increase in R&D spending and other operating cost rises.

Intelligent Cloud operating profit lifted over 26% to reach $8.2 billion (£6.1 billion), driven by demand for Azure and other cloud services as divisional revenue climbed 26% to $18.3 billion (£13.5 billion).

The results, which sent shares down 3.7% in after-hours trading, came a week after Microsoft unveiled a deal worth $68.7 billion (£50.9 billion) to buy gaming developer Activision Blizzard .

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: “Almost $52 billion in quarterly revenues is a number that’s simply hard to wrap your head around, but such is Microsoft’s importance to workplaces, homes and schools across the globe.

“Microsoft’s core Office software, and now cloud computing services, are to IT what Facebook has become for so many – indispensable.

“The stellar news for Microsoft is that where revenues lead, profits will follow, thanks to the incredibly inexpensive nature of running a software business.”

FTSE 100 higher ahead of Fed meeting

07:40 , Graeme Evans

Investors are focused on tonight's US Federal Reserve meeting, when policymakers should outline the path for higher interest rates in 2022.

Wall Street expects the first rates rise of 0.25% in March, with speculation growing that four or even five hikes may be needed this year as inflation pressures continue.

Michael Hewson, chief market analyst at CMC Markets, said: “While no changes to policy are expected today, markets will be looking for clues as to how concerned Fed officials are about headline CPI at 7%, and whether they might be leaning towards a potential 0.5% hike in March rather than the 0.25% that is currently priced in.

“Given the volatility this week, any sort of indication that Fed officials are leaning in this direction would be risky. However, it wouldn’t be beyond the realms of possibilities for them to put the idea out there.”

Wall Street's jitters over the outlook for monetary policy tightening has led investors to dump tech and other high growth stocks.

The Nasdaq 100 fell another 2% last night, but the Dow Jones Industrial Average recovered from an initial deficit of more than 800 points to finish down 67 points or 0.2%.

The FTSE 100 index, which rebounded from Monday's 2.6% loss with a gain of 74 points yesterday, is expected to open another 60 points higher at 7431.

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