FTSE 100 ticks higher as bond markets settle
The FTSE 100 gently undulated between positive and negative territory on Thursday as bond markets calmed and equity markets seemed to warm to the idea of a US rate hike.
Interest rate markets have priced in two interest rate hikes in the US this year, which has filtered through to stock markets, making a September hike a likely option for the Fed and an opportunity to provide guidance on a second hike.
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The S&P 500 closed 0.7% higher overnight.
The improvement in sentiment was felt in Europe, where the German Dax rose 0.2%. The FTSE 100 was 0.1% higher at the time of writing.
“A measure of calm in government bond markets and a slight moderation in oil prices helped steady markets in Asia overnight and saw the FTSE 100 start out flat on Thursday morning,” said AJ Bell investment director Russ Mould.
“The threat of further escalation in the Middle East continues to hum a discordant tune in the background though amid continuing nervousness about the implications for inflation and the cost of borrowing.”
The AI trade continued to grab headlines, with Broadcom reporting eye-catching results, but it failed to shift the dial amid lofty expectations.
“AI chip giant Broadcom may have announced another blowout set of quarterly numbers but the indifferent market reaction shows just how demanding the market is of AI names thanks to their gravity-defying valuations. Third-quarter and guided fourth-quarter revenue did come in ahead of expectations but only by a smidge,” Russ Mould said.
In London, telecoms shares were among the best performers on Thursday. Africa Airtel rose 3.6% while Vodafone added 3.2%. This may suggest an element of risk aversion among equity traders. BT was 1.2% higher.
M&G shares slipped slightly despite posting strong results. The asset manager’s share price was on a tremendous run over the past year, so today’s decline looks like nothing more than minor
“The business is performing strongly, with adjusted operating profit of £435 million, up 15% year on year, our best first half result since listing in 2019. We continue to execute on our strategy, successfully driving the Group towards high-quality and capital-light earnings, which now account for 80% of total adjusted operating profit,” said Andrea Rossi, Group Chief Executive Officer.
“Net inflows from open business of £2.4 billion reflect the breadth and strength of our offering, with Asset Management delivering £2.2 billion of net inflows from external clients, including £0.7 billion through our partnership with Daiichi Life Group.”
Admiral was the FTSE 100’s top faller, losing 2%.
