London stocks slip as Fed’s cautious stance weighs on sentiment
London stocks opened lower on Tuesday, tracking weakness in Asian markets as US Federal Reserve officials maintained a cautious stance on inflation, while gains in AstraZeneca capped declines.
The blue-chip FTSE 100 fell 0.4% to 8,390.38 points as of 7:06 GMT, set for its worst day in over a month. The mid-cap FTSE 250 also dropped 0.4%.
Investor optimism waned as Fed officials hesitated to declare that inflation is on track to meet the central bank’s target on Monday.
This reticence also nudged commodity prices lower.
Traders also held back from placing big bets as they awaited insights from Bank of England Governor Andrew Bailey, due later in the day, and domestic consumer prices (CPI) due on Wednesday.
Focus this week will also be on Nvidia’s quarterly results as it is expected to influence the broader markets given the euphoria around artificial intelligence.
AstraZeneca gained 1.2% after the pharmaceuticals giant said it expects to deliver $80 billion in total revenue by 2030.
Dowlais Group fell 5.1% and was the top loser on the mid-cap index after the GKN automotive owner warned of lower revenue in 2024.
London equities kicked off the week on a positive note, helped by a rally among metal miners and defence stocks, while investors await comments from the Bank of England for hints on the central bank’s interest rate trajectory.
The blue-chip FTSE 100 shook off its recent slump, climbing 0.3%, and breaking free from the two back-toback sessions of losses.
The mid-cap FTSE 250 gained 0.5%, inching close to its key 21,000 mark.
Precious metal miners led sectoral gains, rising 2.3%, as bullion prices surged to record highs on bets the US Federal Reserve could deliver its first rate cut soon and industrial metal miners climbed 0.8% after copper hit an all-time peak.
Energy shares and aerospace and defence stocks were also among the leaders, with the latter rising as uncertainty in the Middle East grew after Iranian President Ebrahim Raisi was killed in a helicopter crash.
“It’s not a surprise to see these (defence stocks) up because if the situation in the Middle East destabilises even further, that will just push governments to spend more on defence” Danni Hewson, head of financial analysis at AJ Bell, said.
Traders are looking forward to the
Bank of England’s Deputy Governor Ben Broadbent’s speech later in the day for clues that could signal the timing of the first rate cut.
They are also on guard for a slew of upcoming domestic economic data, with the key consumer price index (CPI) set to drop on Wednesday, followed by manufacturing and retail sales numbers later this week.
“A little bit of reorienting is going but there’s also a bit of wait and see,” Hewson said referring to Wednesday’s CPI numbers.
Kainos Group jumped 11.7% and was the top performer on the mid-cap index after the services firm reported upbeat full-year results.
Keywords Studios surged 61.2% as European private equity group EQT was in advanced talks to buy the Dublin-based video game services company for $2.79 billion.