FTSE 100 gains after hawkish Fed, Lloyds shares tumble

The FTSE 100 posted gains on Thursday, shaking off concerns about the AI trade and slightly hawkish tones from the Federal Reserve overnight.

London’s leading index was 0.4% higher at the time of writing despite US futures pointing to a soft open and several FTSE 100 stocks, including Lloyds, falling on the back of results.

“Messaging from Kevin Warsh’s press conference leaned hawkish, as he pointed out the strength of economic growth and a “quite positive” jobs market, while inflation remained too high,” said Jon Butcher, Senior US Economist, at Aberdeen.

– Advertisement –

“There were some dovish notes, mainly around improved inflation expectations and evidence of tighter financial conditions.

“But overall, the decision to hold seems to be a short pause to assess ahead of a likely policy hike in December, rather than an indication that no further tightening is needed.”

Poor earnings from Google yesterday also weighed on US stocks, with NASDAQ futures suggesting cash markets would open 1% lower as Google fell 10% amid concerns about higher AI spending.

“While the Federal Reserve decision held few surprises, US futures pointed to a weak start thanks to a poor reception for Google-owner Alphabet’s earnings, announced after the market bell on Wall Street yesterday,” said s AJ Bell investment director Russ Mould.

“The numbers have only further magnified concerns about the sustainability of the huge sums currently being spent on AI.”

There were also several negative updates on this side of the pond.

Haleon shares were the FTSE 100’s biggest losers, crashing 14% after it cut its revenue outlook as the consumer-goods company struggles with volume growth.

Lloyds shares

Lloyds shares fell below 100p to their lowest level since early June after the bank missed revenue estimates and investors fretted about the outlook.

“While results were largely in line with expectations there was some disappointment as underlying revenue came in modestly below forecasts and Lloyds failed to lift guidance, with warnings of a more competitive market for customer deposits,” Russ Mould said.

However, several well-received updates helped keep the FTSE 100 in positive territory.

Shell led the FTSE 100’s gains after the oil major reported a bumper quarter amid higher oil prices.

“Shell’s third quarter numbers landed better than expected this morning and the shares rose at the open as a result,” Adam Vettese, market analyst for etoro explained.

“Adjusted earnings of $10.8 billion marked the strongest result since 2022, with the beat driven largely by a sharp jump in refining margins to around $42 a barrel. That surge, linked to Middle East supply disruptions, turned the downstream business into the clear standout and more than offset softer performances in marketing and parts of upstream.”

Shell shares rose 3%.

Gains for heavyweights such as BAE Systems, BP and AstraZeneca offset loses elsewhere and kept the FTSE 100 abive 10,700.