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Wall Street muted and FTSE lower ahead of interest rate calls

FTSE WASHINGTON, DC - OCTOBER 14: (L-R) Chair of the U.S. Federal Reserve Jerome Powell talks with Governor of the Bank of England Andrew Bailey during a meeting of the IMFC (International Monetary and Financial Committee) at the IMF and World Bank Annual Meetings at IMF headquarters, October 14, 2022 in Washington, DC. Secretary Yellen will hold a news conference and take questions later in the day. (Photo by Drew Angerer/Getty Images)
FTSE: US Federal Reserve chairman Jerome Powell and governor of the Bank of England Andrew Bailey are set to announce interest rate decisions this week. (Drew Angerer via Getty Images)

The FTSE 100 and European stocks were mixed on Monday as the Federal Reserve will announce its final rate decision of the year on Wednesday, with the Bank of England and European Central Bank following on Thursday.

The FTSE 100 (^FTSE) finished flat after trading in the red for most of the session, while the CAC 40 (^FCHI) in Paris rose 0.4% to 7,557 points. In Germany, the DAX (^GDAXI) bounced back and rose 0.2% to 16,803. The Stoxx 600 (STOXX) finished 0.3% higher

Across the pond, US stocks were mixed, signalling a weak start to a week packed with a crucial inflation update and the Federal Reserve's last policy decision of the year.

The Dow Jones (^DJI) opened flat but rose 0.3% to 36,269 points during trading. The S&P 500 (^GSPC) was muted at 4,607 points - despite having reached a intraday record high - and the tech-heavy NASDAQ (^IXIC) slipped 0.3% to 14,355 points.

Investors are looking ahead to this week’s Federal Reserve meeting in the hope for signals as to when policymakers will begin cutting interest rates.

Ipek Ozkardeskaya at Swissquote Bank said: “The economic calendar for the week is heavy.

Read more: UK households expect Bank of England to hike interest rates in 2024

“The US will announce its latest CPI update on Tuesday and the Fed will announce its latest policy verdict on Wednesday, then the Swiss National Bank (SNB), the European Central Bank (ECB) and the Bank of England (BoE) will give their last verdict for this year on Thursday."

“All four major central banks are expected to keep their interest rates steady at the current levels, but we will closely scrutinize how they address the rate cut expectations.”

“Chances are that the accompanying statements will attempt to cool down the doves.”

Read more: Trending tickers - Bitcoin | Macy's | Rolls-Royce | Glencore

In Asia, the Hang Seng (^HSI) in Hong Kong tumbled 1% to 16,178 while the Shanghai Composite (000001.SS) rose 0.7% to 2,991 points. Tokyo’s Nikkei 225 (^N225) also finished in the green, rising 1.5% to 32,791 points.

Read more: UK house prices to drop in 2024, predicts Rightmove

Japan’s stocks jumped on growing bets that its central bank might not hike interest rates next week.

Meanwhile, oil prices were volatile, trading on both sides of the line following Friday reports that the US government was buying up to 3 million barrels for the strategic petroleum reserve.

West Texas Intermediate (CL=F) slipped 0.7% and was trading at $71 per barrel. Brent (BZ=F) crude lost 0.6% to $75 per barrel.

Live coverage is over
  • Pedro Goncalves

    That is all from us today but follow my colleagues across the pond for the latest moving Wall Street.

    Catch us tomorrow for more market moving coverage.

    Thanks!

  • Pedro Goncalves

    US Federal Reserve expected to hold interest rates

    Wall Street widely expects the Federal Reserve to hold rates steady when central bankers unveil their policy decision later this week, my colleague Hamza Shaban writes:

    But that doesn't mean that stocks will continue their rally into next year.

    Investors are banking that the Fed will achieve a soft landing and start to bring rates down in 2024. While that scenario is still possible, rate cuts might also spell a slowing or contracting economy, which would place equities in a different environment than they are in today, writes Greg Marcus, managing director at UBS Private Wealth Management, in a note on Monday.

    Individual stocks will also fare differently next year, "with a variety of winners and losers across all sectors," he said, in an "unequal and fragmented" equities market. Even if the Fed climbs down from their tightening campaign, interest rates will still remain higher than during the lucrative zero percent interest rate era.

    "Investors will be more focused on rewarding companies who show signs of growth and avoiding profitless and speculative companies," he said, emphasizing that fundamentals will play a bigger role than during the more heady 2010's. In 2024, investors will be more discerning in separating the wheat from the chaff, he said.

    "Markets are already high right now, and although the economy has proven resilient to higher rates this year, that cannot go on indefinitely," said Marcus. "Rates will come down but they are still projected to be higher for longer, and not all companies will be able to navigate this environment."

  • Pedro Goncalves

    New cold war?

    The International Monetary Fund (IMF) has warned that the global economy is on the brink of a second cold war which could cost 2.5% to 7% of global GDP.

    Gita Gopinath, the IMF’s first deputy managing director, said that growing tensions between the US and China risks destroying trillions of dollars in global output.

    While the growth of trade has slowed everywhere after the war in Ukraine, growth between blocs that are not politically aligned has slowed more . There are also clear signs that global foreign direct investment (FDI) is segmenting along geopolitical lines.

    If the global economy were to fragment into two blocs based on UN voting on the 2022 Ukraine Resolution and trade between the two blocs were eliminated, global losses are estimated to be about 2.5% of GDP. But depending on economies’ ability to adjust, the losses could reach as high as 7 % of GDP. At the country level, losses are especially large for lower income and emerging market economies ...

    While there are no signs of broad-based retreat from globalisation, fault lines are emerging as geoeconomic fragmentation is increasingly a reality. If fragmentation deepens, we could find ourselves in a new Cold War.

  • Pedro Goncalves

    S&P hits its highest level of the year

    The S&P 500 index hit its highest level of the year temporarily during the session, surpassing July's levels.

  • Pedro Goncalves

    Goldman Sachs urges investors to stop betting against UK property stocks

    Goldman Sachs is telling investors to stop betting against UK property stocks as the market shows signs of recovery.

    Sharon Bell of Goldman Sachs said:

    The real estate market is holding up: housing prices edged up last month amid encouraging signs that mortgage rates are starting to come down.

    UK consumer confidence also rose sharply, outperforming expectations and raising hopes of higher spending on the festive season.

  • Pedro Goncalves

    Calls for Bank of England to cut interest rates

    A view of the Bank of England as it is poised to raise interest rates for the 13th time in a row after disappointing inflation figures showed price rises have not eased. Picture date: Thursday June 22, 2023.
    A view of the Bank of England as it is poised to raise interest rates for the 13th time in a row after disappointing inflation figures showed price rises have not eased. Picture date: Thursday June 22, 2023.

    Campaign for Fair Finance founder, Roger Gewolb, is demanding the immediate reduction of interest rates.

    “Bailey and his team should have gradually raised interest rates earlier instead of keeping them low and using quantitative easing (QE) to inject over a trillion dollars into the UK economy. The 14 consecutive interest rate rises have done absolutely nothing to combat our non-consumer-driven inflation and caused significant damage to the UK economy," he said

    Economist Catherine McBride is also urging Threadneedle Street to reform its monetary policy, ethos and culture.

    She said: “Cutting interest rates will help companies that almost always borrow at a premium to the base rate. This is especially true of SMEs who don't have access to shareholder funds but are the bedrock of the economy and are responsible for most employment”.

    The Bank of England will announce its decision on interest rates this Thursday at 12h00

  • Pedro Goncalves

    WH Smith boss sees pay deal jump 78% to £2.9m as rebound continues

    WH Smith’s boss has seen his pay surge by 78% over the past year after the retailer continued its travel-boosted resurgence.

    Carl Cowling, chief executive since 2019, received a total pay deal worth £2.91m for the year to August 31, according to the firm’s latest annual report.

    That compares to a £1.63m pay deal a year earlier.

    Around four-fifths of the larger pay deal was linked to performance-based bonuses after the company saw sales and profits jump.

    Mr Cowling got £2.25m as a result – £998,000 of annual bonus and £1.25m through the retailer’s long-term bonus scheme.

    The boss did not get any money through the long-term incentive scheme the previous year.

  • Pedro Goncalves

    Trending tickers: Bitcoin | Macy's | Rolls-Royce | Glencore

    Representation of the bitcoin cryptocurrency and a price chart are seen in this illustration taken October 24, 2023. REUTERS/Dado Ruvic/Illustration
    Representation of the bitcoin cryptocurrency and a price chart are seen in this illustration taken October 24, 2023. REUTERS/Dado Ruvic/Illustration

    Bitcoin (BTC-USD) - Bitcoin reversed nearly a week of gains on Monday morning, briefly dropping below $41,000 (£32,663), with the dip resulting in around $270m of long positions to be liquidated.

    Macy's (M) - Retail darling Macy's stock was up almost 20% in premarket trade in the US after reports by WSJ and Yahoo Finance late Sunday that the chain received a $5.8bn buyout offer from real estate investor Arkhouse Management and asset manager Brigade Capital Management.

    Rolls-Royce (RR.L) - Engine-maker Rolls-Royce led the FTSE 100 on Monday morning, rising more than 2% off the back of an increased price target from broker Citi.

    Glencore (GLEN.L) - Elsewhere in the FTSE miners were leading declines, as base metal prices were pushed lower by the dollar on disappointing consumer price data coming from China.

    Read the full story here

  • Pedro Goncalves

    China woes hit FTSE

    The FTSE 100 started the week on the back foot, dragged lower by the mining sector as figures from China over the weekend showed the economy swung deeper into deflation, AJ Bell investment director Russ Mould, said.

    “An indicator of depressed domestic demand and a very different story to the inflationary pressures faced in the rest of the world, the data inevitably hit the miners given the world’s second largest economy is such a rapacious consumer of commodities.

  • Pedro Goncalves

    Heathrow tops six million passengers in November

    Passenger numbers at Heathrow were just 2% below pre-pandemic levels last month, new figures show.

    Some 6.1 million passengers travelled through the terminals in November, the west London airport said.

    That is compared with 6.2 million during the same month in 2019.

    Demand for flights to North America peaked before Thanksgiving, with more than 50,000 passengers flying across the Atlantic from Heathrow on November 17, which was the last Friday before the holiday.

    Diwali celebrations also sparked a surge in travel to India.

Watch: Business Lookahead: Last central bank push of 2023

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