Miners lift FTSE 100 as Fed meeting kicks off

(Alliance News) - Stock prices in London were largely higher at midday on Tuesday, with stimulus talks in China helping lift the mood, as attention turns to the US Federal Reserve which begins its two-day monetary policy meeting later.

The FTSE 100 index was up 9.63 points, or 0.1%, at 7,688.22. The FTSE 250 was down 24.77 points, or 0.1%, at 19,120.21, and the AIM All-Share was up 2.18 points, or 0.3%, at 765.78.

The Cboe UK 100 was flat at 766.86, the Cboe UK 250 was flat at 16,796.11, and the Cboe Small Companies was flat at 13,429.44.

Chinese leaders on Monday pledged fresh measures to boost the nation's stuttering economy, building on optimism that central banks were nearing the end of their rate-hiking cycle.

After a meeting, the 24-person Politburo recognised "the current economic operation is facing new difficulties and challenges" and agreed they must "implement precise and effective macroeconomic regulation, strengthen countercyclical regulation and policy reserves".

Danni Hewson, head of financial analysis at AJ Bell, said that while detail remains "thin on the ground" at present, it was enough to lift the Hang Seng by 4.1% and send commodity stocks in the UK higher.

At midday in London, Anglo American was up 4.2%, Antofagasta up 4.3%, Rio Tinto up 3.6%, and Glencore up 1.7%. Asia-focused insurer Prudential also rose 3.5%.

Unilever was the best-performing blue-chip stock at midday, rising 4.6% after reporting double-digit interim profit growth, while volumes were steady from the prior year.

The consumer goods firm reported that pretax profit jumped 21% to GBP5.27 billion in the first half of 2023, from GBP4.36 billion a year before. Revenue rose 2.7% year-on-year to GBP30.43 billion, compared to GBP29.62 billion.

"Things should get easier from here as costs are expected to ease over the second half. That'll give room to take the foot off the pedal when it comes to price hikes - good news for consumers, and it should release some pressure on volumes," said Matt Britzman, equity analyst at Hargreaves Lansdown.

Compass Group was the FTSE 100's worst-performer, meanwhile, down 4.6%, despite posting strong organic growth in its financial third quarter and leaving its full-year guidance unchanged.

The contract caterer said organic revenue growth was 15% in the three months to June 30 and 21% in the year-to-date.

Consequently, Compass reiterated its annual guidance, expecting operating profit growth of 30% on a constant-currency basis, which is to be delivered through organic revenue growth of around 18% and an underlying operating margin in the range of 6.7% to 6.8%.

In the FTSE 250, Tyman added 6.1% after it said full-year adjusted operating profit would be at the top end of market expectations, despite reporting a drop in half-year pretax profit.

The supplier of engineered fenestration components and access solutions to the construction industry said pretax profit in the first half of 2023 had fallen to GBP22.7 million from GBP37.4 million the year prior. Revenue dropped to GBP329.9 million, from GBP360.0 million.

Interim Chief Executive Officer Jason Ashton said it was a "solid overall performance" against a strong comparative period and despite a continuation of the weak markets experienced in the fourth quarter of 2022.

Tyman said it expects full-year adjusted operating profit at the top end of market expectations, citing company-compiled analyst consensus of GBP80.8 million, within a GBP77.6 million to GBP84.3 million range. This would still mark a decrease from GBP94.6 million in 2022, however.

Elsewhere in London, Reach surged 19% after it said it expects 2023 profit to be in line with market consensus, despite a decline in revenue in the first half of the year.

Pretax profit in the 26 weeks that ended June 25 was GBP6.7 million, down more than two thirds from GBP32.0 million a year before, as revenue slipped 6.1% to GBP279.4 million from GBP297.4 million.

Reach said plans to reduce full-year operating costs by 5% to 6% are on track to deliver second-half weighted savings.

As a result, Reach said, profit expectations for 2023 remain in line with market consensus for adjusted operating profit of GBP94.9 million. This would be down 11% from adjusted operating profit of GBP106.1 million in 2022, however.

On AIM, N4 Pharma surged 27% as it celebrated a patent grant for Nuvec in the US.

N4 is a pharmaceutical company focused on the development of a novel silica nanoparticle delivery system, known as Nuvec, for vaccines and therapeutics for licensing to pharmaceutical and biotech partners.

The patent is for the composition of matter of the nanoparticle itself. It sits alongside the first US patent grant announced last January, which concerned how the nanoparticle is made using a broad description of the manufacturing process used by the company.

In European equities on Tuesday, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was up 0.1%.

Stocks in New York were called largely flat as nerves built ahead of the US Federal Reserve's next interest rate decision. The Dow Jones Industrial Average was called marginally lower, the S&P 500 index was seen marginally higher, and the Nasdaq Composite was called up 0.2%.

The Fed starts its two-day policy meeting in just a couple of hours and is widely expected to announce a 25 basis point hike to interest rates on Wednesday.

However, with a rate hike on Wednesday all but guaranteed, markets will be focused on Fed Chair Jerome Powell's press conference shortly after the announcement, hoping for hints on when the current tightening cycles may end.

The dollar was mixed at midday as nerves built ahead of a busy week of consecutive interest rate decisions from the Fed, European Central Bank and the Bank of Japan from Wednesday.

The pound was quoted at USD1.2843 at midday on Tuesday in London, up from USD1.2816 at the close on Monday. The euro stood at USD1.1045, lower against USD1.1073. Against the yen, the dollar was trading at JPY141.43, higher compared to JPY141.27.

Brent oil was quoted at USD82.54 a barrel at midday in London on Tuesday, up from USD82.23 late Monday. Gold was quoted at USD1,960.61 an ounce, higher against USD1,958.30.

Still to come on Tuesday's economic calendar, there is a US consumer confidence reading at 1500 BST.

By Heather Rydings, Alliance News senior economics reporter

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