Stocks close mixed ahead of Fed and BoE decisions

(Alliance News) - Stock prices in London closed mixed on Tuesday, as investors nervously look ahead to interest rate decisions from the US and England, and what they will mean for the rest of 2023.

The FTSE 100 index closed up 7.26 points, 0.1%, at 7,660.20. The FTSE 250 ended down 22.57 points, 0.1%, at 18,426.70, and the AIM All-Share closed up 0.35 of a point, at 742.41.

The Cboe UK 100 ended up 0.1% at 762.65, the Cboe UK 250 closed down 0.1% at 16,059.99, and the Cboe Small Companies ended down 0.1% at 13,376.84.

In European equities on Tuesday, the CAC 40 in Paris ended down 0.1%, while the DAX 40 in Frankfurt ended down 0.4%.

In August, the eurozone's consumer price index rose by 5.2% on-year, slowing from a 5.3% rise in July. An earlier flash estimate had expected the figure to be unchanged from July's 5.3%. A year earlier, the rate of annual inflation was 9.1%.

On a month-on-month basis, consumer prices rose by 0.5%, after falling 0.1% in July. The flash estimate had been for a 0.6% rise.

Last Thursday, the European Central Bank raised interest rates to an all-time high. It lifted interest rates by 25 basis points as inflation in the euro area is expected to remain "too high for too long".

Investors are now waiting for several more central bank decisions.

The US Federal Reserve will be the first to announce its interest rate decision on Wednesday, followed by the Bank of England on Thursday and the Bank of Japan on Monday.

The US central bank is widely expected to leave interest rates unchanged after raising them to their highest level in 22 years in July. The focus will therefore lie on the central bank's forward guidance and economic projections.

According to the CME FedWatch Tool, there is a 99% chance the central bank will leave the federal funds rate range unchanged at 5.25% to 5.50%.

At the November meeting, CME data indicates the market predicts a 71% likelihood of no change to rates, but 29% are anticipating a 25 basis point hike.

Before the US interest rate, focus will be largely on UK inflation data at 0700 BST.

Analysts at Lloyds Bank commented: "UK August CPI inflation will be released early Wednesday morning, the day before the BoE announcement. We expect annual headline CPI inflation to tick up to 7.1% from 6.8% in July due to the recent rise in petrol prices and an increase in the duty on alcohol. More positively, 'core' CPI inflation (excluding energy & food prices) is expected to have slipped to 6.8% from 6.9%. Nevertheless, the rebound in headline inflation may reinforce the BoE's resolve to hike this week."

Meanwhile, Fawad Razaqzada at City Index and FOREX.com said the data "could influence" the BoE's decision-making.

The pound was quoted at USD1.2399 at the London equities close Tuesday, up compared to USD1.2393 at the close on Monday. The euro stood at USD1.0691 at the European equities close Tuesday, higher against USD1.0684 at the same time on Monday. Against the yen, the dollar was trading at JPY147.71, virtually unchanged compared to JPY147.70 late Monday.

In the FTSE 100 index, B&Q parent Kingfisher ended the day down 9.9%.

It cut its annual profit outlook, with sales in July hurt by wet weather, though the owner of a number of DIY chains announced a new GBP300 million share buyback.

For the six months to July 31, Kingfisher reported sales rose 1.1% to GBP6.88 billion from GBP6.81 billion a year earlier. However, pretax profit slumped by a third year-on-year to GBP317 million from GBP474 million.

Kingfisher now expects adjusted pretax profit for the full year of GBP590 million, its guidance cut from GBP634 million previously. The new outlook would represent a 22% fall from the GBP758 million achieved in the year ended January 31.

Hargreaves Lansdown rose 5.1%.

For the 12 months ended June 30, the UK-based digital wealth management service reported pretax profit of GBP402.7 million, up 50% from GBP269.2 million a year prior. Revenue rose 26% to GBP735.1 million from GBP583.0 million.

Both figures beat MarketScreener-cited forecasts, which put pretax profit at GBP380 million, and revenue at GBP717 million.

In the FTSE 250 index, C&C closed up 5.5%.

It said it is mulling "other forms of capital returns" after reinstating its dividend, and the Magners and Bulmers cider maker added that it has made decent progress in resolving a resource planning system implementation issue.

Amongst London's small-caps, consumer reviews platform Trustpilot jumped 17%.

The Copenhagen-based firm said revenue in the first half ended June 30 rose 15% on-year to USD84.6 million from USD73.4 million. It narrowed its pretax loss to USD4.0 million from USD9.2 million a year prior.

Looking ahead, Trustpilot backed its annual top-line outlook, predicting mid-teens constant currency revenue growth. However, it now believes its adjusted Ebitda will beat the current range of market expectations.

On AIM, Safestyle UK closed down 47%.

The retailer and manufacturer of PVCu replacement windows and doors said it has fallen behind internal forecasts since mid August, which has persisted into September.

"It is management's belief that following a wet summer, the unseasonally warm weather at the end of August into the hottest early September on record is compounding the macroeconomic factors that influence current market demand levels," Safestyle explained.

Stocks in New York were lower at the London equities close, with the DJIA down 0.7%, the S&P 500 index down 0.6%, and the Nasdaq Composite down 0.9%.

Brent oil was quoted at USD95.20 a barrel at the London equities close Tuesday, up from USD94.78 late Monday. Gold was quoted at USD1,933.01 an ounce at the London equities close Tuesday, up against USD1,927.22 at the close on Monday.

In Wednesday's UK corporate calendar, there are half year results from insurer M&G. There are also full-year results from Supermarket Income REIT.

By Sophie Rose, Alliance News reporter

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