FTSE edges up as investors await US interest rate decision
London’s FTSE 100 closed the day 15.34 points higher, or 0.2%, at 7,788.37.
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Your support makes all the difference.London’s FTSE 100 edged higher after starting the week trailing behind, as investors await an influential US interest rate decision.
Education publisher Pearson jumped from the bottom of the blue-chip index on Tuesday to the top on Wednesday, with gains of more than 10%.
The firm had felt the knock-on impact of remarks from a US digital learning rival over artificial intelligence hurting its business, warning students were turning to ChatGPT to answer their course questions.
But a rebound in its share price, as well as gains for industrials and some retailers, helped lift the FTSE higher and offset banking losses.
It closed the day 15.34 points higher, or 0.2%, at 7,788.37.
Investors will be focused on the interest rate decision from the Federal Reserve in the US on Wednesday, analysts pointed out.
Both central banks face an economy that is slowing, but where inflation is high, and unemployment at multiyear lows, and stress on the banking sector remains a very clear concern
It follows the rescue takeover of First Republic Bank by JP Morgan earlier this week, marking the third US bank to fail this year.
Part of the reason for the banks’ failures is seen to be a result of the central bank hiking interest rates last year, which caused their assets fixed to lower rates to lose value.
Michael Hewson, chief market analyst for CMC Markets UK, said: “European markets have undergone a modest rebound after yesterday’s negative start to the week, with the focus very much on Wednesday’s Federal Reserve interest rate decision, as well as Thursday’s European Central Bank (ECB) meeting.
“Both central banks face an economy that is slowing, but where inflation is high, and unemployment at multiyear lows, and stress on the banking sector remains a very clear concern.
“How they manage the messaging around these decisions over the next 24 hours is likely to dictate how much volatility we can expect to see between now and the end of the week.”
Other top European markets enjoyed an uplift, with the German Dax closing 0.56% higher and the French Cac up 0.28%.
It was a slow start for investors across the pond, with the S&P 500 up 0.1% and Dow Jones flat by the time European markets closed.
The pound edged up by 0.6% against the US dollar to 1.254, and was up by 0.2% against the euro to 1.135.
In company news, Lloyds Banking Group sunk to the bottom of the FTSE 100 despite beating forecasts with a 46% leap in its pre-tax profit.
However, the lender said it had seen “modest” increases in borrowers falling into arrears and defaulting on loans as living costs ramped up, but remained below pre-pandemic levels.
Its share price dropped by more than 3.5% after unveiling its first-quarter results.
Paddy Power owner Flutter also saw its share price dip despite revealing it saw a jump in gamblers at the start of the year, after holding on to customers betting on the football World Cup over winter.
The betting giant recently responded to a new White Paper published by the Government, warning that around 300,000 people in Britain are estimated to be experiencing problem gambling.
Flutter said it had already implemented many of the measures proposed in the highly anticipated paper.
Its share price closed 1.2% lower.
The biggest risers on the FTSE 100 were Pearson, up 76p to 830p, Vodafone Group, up 2.47p to 96.16p, Melrose Industries, up 10.5p to 420.5p, Burberry Group, up 64p to 2,607p, and Scottish Mortgage Investment Trust, up 13.6p to 625.8p.
The biggest fallers on the FTSE 100 were Lloyds Banking Group, down 1.7p to 45.98p, Haleon, down 12.1p to 340.9p, Croda International, down 204p to 6,734p, RS Group, down 25.6p to 887.4p, and Kingfisher, down 5.9p to 251.3p.