The FTSE 100 and European stocks were higher on Thursday as traders work see no news as good news after Federal Reserve chairman Jerome Powell declined to give any hints on the future direction of interest rates.
The FTSE 100 (^FTSE) rose 0.18% to 7,708 at the open, while the CAC 40 (^FCHI) in Paris climbed 0.22% to 6,884 points. In Germany, the DAX (^GDAXI) gained 0.19% to 14,802.
Retailer JD Sports (JD.L) led early trading gains, up 3.12%, after it reported revenues growth for the 22 weeks to 31 December of more than 10%, which compared with growth of 5% over the first half of its financial year.
Miners also pushed the UK blue-chip index higher in the morning, with Glencore (GLEN.L) up by 1.40%, Anglo American (AAL.L) climbing 1.35%, Antofagasta (ANTO.L) up 1.20% and Endeavour Mining (EDV.L) and Rio Tinto (RIO.L) also both above 1%.
On the other side of the spectrum, housebuilder Barratt Developments (BDEV.L) crashed by 2.83% as it warned that the UK housing market has seen a “marked slowdown” in the last six months.
The UK’s largest housebuilder told the City that demand in the first half of 2023 is likely to be hit by rising mortgage rates and the cost of living squeeze, which will “undoubtedly impact trading”.
In a trading update for the half year to 31 December, Barratt warns that the outlook for the second half of its financial year is “uncertain”. Homebuyer confidence and the availability and competitive pricing of mortgages will be “critical to the health of the UK housing market in the coming months”, it said.
Sainsbury (SBRY.L) was down 2.60% despite a positive update and raised guidance from the supermarket group, with sales up 7.1% over the Christmas period. Investors are concerned about whether the good performance can continue amid a cost of living crisis.
Charlie Huggins, head of equities at Wealth Club, said: “This is a solid performance from Sainsbury’s with the group raising its profits and cash guidance for the year, against an intensely competitive market backdrop. It seems that UK shoppers indulged in one final sales splurge in the run up to Christmas, benefitting Sainsbury’s and its peers. However, with the slowdown in consumer spending yet to really bite, it’s likely the environment will get tougher.”
Meanwhile, Brent crude (BZ=F) slipped and was trading at around $79 per barrel, as an unexpected build in crude and fuel inventories in the United States, the world’s biggest oil consumer, and economic uncertainty reignited demand worries.
S&P 500 futures (ES=F), Dow futures (YM=F) and Nasdaq futures (NQ=F) were all in the red as trade began in Europe.
In Asia, Tokyo’s Nikkei 225 (^N225) was up by 1.03% to 26,446 points, while the Hang Seng (^HSI) in Hong Kong rose 0.49% to 21,435. The Shanghai Composite (000001.SS) slipped 0.24% to 3,161 points.
Across the pond, stocks closed higher on Tuesday, even as Wall Street processed hawkish rate talk from Federal Reserve officials and remarks on inflation from chair Jerome Powell at an event hosted by Sweden’s central bank.
The Dow Jones (^DJI) gained 0.56% to close at 33,704 points. The S&P 500 (^GSPC) advanced 0.70% to finish at 3,919 points and the tech-heavy NASDAQ (^IXIC) rose 1.01% to 10,742.
Michael Hewson, chief market analyst at CMC Markets UK, said: “Fed chair Jay Powell’s comments yesterday did little to indicate whether the FOMC was inclined to take another step down in its rate hiking cycle when it next meets at the end of the month.”
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “While [Powell’s speech] won’t have directly given the markets something to digest, there is an element of no news is good news.
“Reports of global supply chain bottlenecks easing, and the reopening of China mean that ultimately, markets are baking in some renewed optimism. There is a ceiling to this good mood, though. Stock markets remain highly sensitive and have been prone to some misdirection in recent trading days.”
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