MARKET REPORT: FTSE rises as traders bet rate hikes may have peaked
The FTSE 100 index rose yesterday as traders bet that global interest rate rises may have peaked.
London’s main index nearly hit a one-month high after the U.S. Federal Reserve hinted it may not raise rates further, raising hopes the Bank of England will do the same.
Federal Reserve Bank of Dallas President Lorie Logan said there may be less need for the U.S. central bank to raise its benchmark interest rate again.
As a result, US Treasury yields fell from 16-year highs recorded last week. At the same time, Aviva Investors said it had bought UK government bonds, betting that the Bank of England will cut interest rates next year.
Sunil Krishnan, head of multi-asset funds at Aviva: “At the moment there is a possibility that the UK will have to enter a significant haircut cycle, and I don’t think that will be reflected in prices.”
London’s main index nearly hit a one-month high after the US Federal Reserve hinted it may not raise rates further, raising hopes the Bank of England will do the same.
The blue-chip stock index had its best day in almost a month, rising 1.8 percent, or 136 points, to 7,628.21. Meanwhile, the FTSE 250 gained 2.3 per cent, or 395.61 points, to 17,967.67.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “There will surely be long-term geopolitical implications from a new conflict in the Middle East, but for now attention appears to be returning to interest rates, amid expectations.” “That the screws of monetary policy will not be tightened again.”
Defense stocks rose for the second day in a row following the Hamas attack on Israel, with the BAE Systems share price rising 1.6 per cent, or 16p, to 1,041p.
Mining companies also rose as investors sought safe-haven assets such as gold.
Anglo American gained 5.6 per cent, or 121 pence, to 2,269.5 pence, Antofagasta rose 4.5 per cent, or 62 pence, to 1,445 pence and Glencore jumped 3.4 per cent, or 15.5 pence. pence, at 466.25 pence.
Meanwhile, oil prices stabilized as events following the terrorist organization’s attacks on Israel suggested the conflict may not spread across the Middle East.
It settled at around $87 a barrel yesterday on hopes that the conflict will be contained rather than spreading to oil-producing countries.
BP rose 0.9 per cent, or 4.8 pence, to 525.1 pence and Shell added 0.5 per cent, or 14 pence, to 2,663 pence. Sticking with the oil industry, Energean recouped some of its losses following the recent sell-off caused by the terrorist attacks on Israel.
Stock Watch – Treatt
Treatt sweetened investors with a positive update.
The ingredients maker expects revenue to have risen 5% to around £147m in the 12 months to the end of September.
While second-half sales were hit as some customers held less inventory due to higher interest rates, such trends have eased with the help of price increases.
Profits of around £17 million (up 11 per cent on the previous year) should meet expectations.
The shares gained 14.4 per cent, or 61 pence, to 484.5 pence.
Shares in the FTSE 250 oil and gas group, which is listed in both London and Tel Aviv, plunged 17.6 percent on Monday amid concerns over its involvement in the development of the Karish gas field offshore From Israel.
But bargain hunters rushed to the stock yesterday in a sign that the sharp sell-off was overblown. The shares rose 9.2 per cent, or 78.5p, to 933.5p.
Retailers bounced back after JP Morgan’s gloomy outlook on Monday. Ocado shares rose 6.7 per cent, or 37.6 pence, to 600 pence, Next added 2 per cent, or 136 pence, to 7,036 pence, Marks & Spencer jumped 2 per cent, or 4.4 pence, to 225.4p and Tesco rose 2.2 per cent, or 6p, to 280.4p.
There was also good news for Currys after it received offers from several potential buyers to take over its business in Greece and Cyprus. The electrical goods retailer began a strategic review of Kotsovolos in June. The shares added 5 per cent, or 2.34 pence, to 49.34 pence.
It looked like AIM-listed pensions manager STM Group would go private after agreeing to buy it for £39.8m.
In mid-July, the company reached an agreement in principle with Pension SuperFund Capital on a potential 70p cash offer.
In early September, the pensions consolidator revised its offer to 67 pence per share. The shares rose 9.5 per cent, or 5p, to 57.5p.