FTSE 100 treads water as investors brace for key interest rate decisions
London’s FTSE 100 had a bumpy start to the day but managed to make gains in the afternoon, closing 0.41% higher.
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Your support makes all the difference.The calm before the storm has been felt by global markets as the US and UK prepare to deliver their all-important interest rate decisions.
America’s Federal Reserve will be under pressure to strike the right balance between fighting inflation and maintaining stability in the fraught banking sector, when it announces its plan for interest rates on Wednesday evening.
The recent collapse of Silicon Valley Bank and Signature Bank, and the plummeting share prices of some regional lenders, has thrown the Fed’s monetary policy decisions further into the spotlight.
It promises to be a bravura performance for Fed chair Jerome Powell, who will need to stress the Fed’s commitment to fighting inflation while avoiding provoking another crisis in US regional banks
Meanwhile, financial markets expect the Bank of England to push interest rates higher on Thursday after a surprise jump in UK inflation last month.
Consumer Prices Index (CPI) inflation unexpectedly resurged in February, to 10.4% from 10.1% in January, driven by decades-high food prices.
London’s FTSE 100 had a bumpy start to the day but managed to make gains in the afternoon, led by retailers like Ocado and B&M and natural resources.
The blue-chip index closed 30.62 points higher, or 0.41%, at 7,566.84.
US markets started the day trading slightly on the backfoot amid investor nervousness ahead of the rates decision.
The S&P 500 was down 0.2% and Dow Jones was 0.25% lower when European markets closed.
Chris Beauchamp, chief market analyst at online trading platform IG, said: “The surge in stocks from Monday’s lows has slowed to a crawl today, as attention turns to the Fed decision.
“No one wants to be too energetic in their trading ahead of such an important moment.
“It promises to be a bravura performance for Fed chair Jerome Powell, who will need to stress the Fed’s commitment to fighting inflation while avoiding provoking another crisis in US regional banks.
“Most of the market reaction will hinge on how well he accomplishes this task.”
He added: “Hopes that the Bank of England would be able to stick to a dovish line tomorrow have been confounded, as a rise in CPI growth piles on the pressure.”
The pound surged on Wednesday morning following February’s inflation reading, prompting markets to price in a further interest rate hike.
It hit highs of nearly 1.23 US dollars, but eased off by the afternoon and was up just 0.2% to 1.2239 US dollars when markets closed. Sterling was down by about 0.1% against the euro to 1.1332.
European markets elsewhere managed to hold onto gains, with the German Dax closing 0.14% higher and the French Cac up 0.26%.
In company news, housebuilder Vistry told shareholders that its profit was impacted by setting aside cash for post-Grenfell fire safety upgrades.
The firm said that it put £97 million aside during the year, which helped push down its pre-tax profit by more than one-fifth to £248 million over past year.
Its share price eked up by 0.14% at close.
Tonic maker Fever-Tree revealed it would be pushing up the prices of its drinks in efforts to combat higher costs for its glass bottles.
The brand told investors that it was still facing challenging conditions when it comes to glass and freight costs, but that it had seen an encouraging start to the year.
Investors were placated by the decision to up prices and its share price jumped by 9.5%.
The biggest risers on the FTSE 100 were Ocado Group, up 8.3p at 435.1p, HSBC, up 10.6p at 564.6p, B&M European Value Retail, up 9p at 481.6p, Endeavour Mining, up 31p at 1,791p, and Reckitt Benckiser, up 104p at 6,022p.
The biggest fallers of the session were British Land, down 23.9p at 375p, Land Securities, down 23p at 590.4p, Unite Group, down 29p at 886p, Airtel Africa, down 2.8p at 106.9p, and Segro, down 18p at 726p.