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LONDON REPORT BEST OF THE BROKERS Wall Street sell-off reins in FTSE 100 after Powell rate warning
by cityam
LONDON’s FTSE 100 was tamed yesterday by a sell-off that gathered pace in Wall Street Tuesday night after US Federal Reserve chair Jerome Powell signalled outsized interest rate rises could be back on the menu.
The capital’s premier index squeezed out a 0.13 per cent gain to close at 7,929.93 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, fell 0.52 per cent to 19,851.97 points.
America’s top indexes the S&P 500, Dow Jones and techheavy Nasdaq all clocked steep falls on Tuesday following chair Powell’s hawkish remarks to the US congress.
London markets traded for about an hour after Powell’s comments and eventually closed just about in the red.
Powell said the eventual interest rate peak may wind up being higher than expected to tame inflation that has shown signs of late of sticking around.
Victoria Scholar, head of investment at Interactive Investor, said: “European markets [were] mostly in the red [in the morning] taking their cues from last night’s Fed-driven sell-off on Wall Street.”
A rally from insurer Hiscox sending it more than five per cent higher helped the FTSE 100 just about keep its head above water.
The pound, which slid sharply Tuesday after Powell’s speech, losing as much as 1.2 per cent against the US dollar, was broadly flat yesterday.
Traders piled into the greenback on the prospect of bagging gains on higher rates on US government debt. The yield on the two-year treasury hit its highest level since 2007 on Tuesday. Yields and prices move inversely.
Investment confidence in Hotel Chocolat is melting away, with backers flaking over its lower-than-expected profitability – which is now expected to come in at £4-7mwith its gross margin weighed down 200 basis points from cost pressures. However, Peel Hunt is committing to a long stay with the stock, maintaining a hold position at 175p per share.
Opening Above Expectations
Industrial laundry and workwear apparel giant Johnson Service Group has strong organic revenue growth of 28.8 per cent –although activity in the UK is still slightly below the 2019 level. Pricing momentum is well orientated in the UK, especially in hospitality and in healthcare. Peel Hunt has placed the buoyant firm on its add list, with a target price of 124p per share.
