FTSE 100 close: London ends week marginally up after Powell Fed speech indicates caution
London’s FTSE 100 is ended the week in subdued fashion, marginally up around a crunch speech across the pond by Fed chair Jerome Powell.
The capital’s premier bluechip index closed on 7,337.38 points Friday morning, up around 0.05 per cent, while the FTSE 250, which is more aligned to the domestic market, finished down 0.3 per cent.
Tesco and Sainsbury’s finished the day on a positive note, up 1.88 and 1.43 per cent respectively, This comes after this morning’s good consumer confidence news from GfK, saying Brits had “renewed optimism.”
FTSE 250’s biggest riser was Aston Martin Lagonda 5.61 per cent after Jeffries upgraded it to buy and ahead of its results next week, Prudential was among those leading losses on FTSE 100, down just under 1.5 per cent.
There were major dents on FTSE 250 for Watches of Switzerland, down 20 per cent, after earlier in the day it wad hit by 26.3 per cent. CMC Markets dropped by seven per cent at the close after having plummeted 13.12 per cent at the open.
Investors bailed on Watches of Switzerland following this morning’s announcement that watch-maker giant Rolex would purchase Bucherer.
Meanwhile, CMC Markets, the trading platform owned by Tory peer Lord Cruddas, fired another warning on income today as “challenging” conditions continue to weigh on activity.
In a statement this morning, the firm said quiet markets had continued through August and trading and investing net revenues were down 20 per cent compared to last year as a result.
Russ Mould, investment director at AJ Bell said “investors seem to fear the tie-up will mean Bucherer gets preferential treatment including better access to the watches that consumers are desperate to buy.
“Watches of Switzerland’s efforts to reassure the market that there will be no change in how Rolex allocates stock have fallen on deaf ears. This is what Rolex might have promised now, but that could easily change in the future.
Meanwhile, in the US Nvidia’s mega earnings this week failed to lead to a new market rally, after Wall Street ended two per cent down at the close last night.
This comes after the AI chipmaker propelled its sales to $13.5bn (£10.6bn) in its second quarter, more than doubling from a year ago.
“So much for Nvidia’s knock-out earnings triggering a new global stock market rally”, said Mould. “The celebration was short-lived, with Wall Street ending Thursday on a sour note as the Nasdaq closed the day nearly 2 per cent lower. The negative sentiment extended to Asia and parts of Europe on Friday, including a 2 per cent decline in Japan’s Nikkei 225 index.”
“There is a saying with investments that it can be better to travel than arrive, and one might conclude that Nvidia’s stellar share price run was susceptible to a bout of profit taking and that’s precisely what we got.
“Despite the good fortunes of Nvidia and positive news flow from the company, there is no getting over the fact that investors remain worried that interest rates will stay higher for longer and that casts a downer on the markets as a whole.
This comes as Federal Reserve chair Jerome Powell indicated the U.S. central bank will proceed “carefully” when deciding whether to hike interest rates again or hold them steady, according to Reuters.
Powell’s remarks at the Fed’s annual symposium in Jackson Hole, Wyoming balanced declines in the pace of price increases over the past year with the surprising over performance of the U.S. economy.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “The FTSE 100 has had a strong week and gains are expected to be retained as we head into the long weekend. The lack of big-hitting news means there’s little to rock the boat.
“Comments from Fed president Susan Collins have already laid the ground for the fact rate increases may be needed to stifle inflation, with more work to be done to get it in line with targets within a reasonable timeframe.”