(Alliance News) -Â After early wobbles on Thursday stock markets recovered as they appeared to take a hawkish US Federal Reserve meeting in their stride.
London's internationally-exposed FTSE 100 outperformed other European bourses thanks to a weaker pound, which struggled as the dollar soared on strong signalling for an imminent US interest rate hike.
The FTSE 100 index closed up 84.53 points, or 1.1%, at 7,554.31. The FTSE 250 ended down 18.51 points, or 0.1%, at 21,854.57, and the AIM All-Share closed down 10.65 points, or 1.0%, at 1,086.64.
The Cboe UK 100 ended up 1.0% at 750.55, the Cboe UK 250 closed up 0.1% at 19,600.93, and the Cboe Small Companies ended up 0.9% at 15,528.75.
In European equities on Thursday, the CAC 40 in Paris ended up 0.6%, while the DAX 40 in Frankfurt ended up 0.4%.
"The stock market rollercoaster has continued today, after opening sharply lower in the aftermath of last night's sharp post Fed sell off and the weakness in Asia markets, European markets have slowly peeled themselves off the canvas. The FTSE 100 has managed to recover...we are now back to within touching distance of 7,600," said CMC Markets chief market analyst Michael Hewson.
Pushing the blue-chip FTSE 100 higher was its heavyweight banking sector, with shares in Standard Chartered ending up 4.2%, HSBC Holdings up 3.0%. HSBC shares were higher after Exane BNP upgraded the lender to Outperform, with StanChart rising in a positive read-across.
Additionally, the mood was upbeat for the financial sector as investors look ahead to a higher interest rate world.
The Fed on Wednesday kept interest rates unchanged but signalled tightening is imminent.
"With inflation well above 2% and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate," the Fed said.
The economy no longer needs sustained high levels of monetary policy support given high inflation and a tight labour market, Powell said in a press conference following Wednesday's decision.
"I would say the committee is of a mind to raise the federal funds rate at the March meeting, assuming that conditions are appropriate for doing so," said Powell.
Stocks in New York pared early gains to Wednesday to finish mostly lower, but made strides on Thursday. The Dow Jones was up 1.1% in morning trade on Thursday, the S&P 500 up 1.0% and the tech-heavy Nasdaq Composite up 0.6%.
"The fact that US futures have been able to regain some of their losses from last night is impressive, but will it be a repeat of the day before?" questioned Fawad Razaqzada, market analyst at ThinkMarkets.
The dollar was boosted by the Fed decision, as well as data showing the pace of US economic growth accelerated in the final quarter of 2021 according to the Department of Commerce.
US gross domestic product grew at an annual rate of 6.9% in the fourth quarter, expanding from 2.3% growth in the third quarter. The latest reading was higher than the market forecast, cited by FXStreet, of 5.5%.
The pound was quoted at USD1.3393 at the London equities close Thursday, down compared to USD1.3514 at the close on Wednesday. The euro fell to USD1.1152 at the European equities close from USD1.1280 at the same time on Wednesday.
Against the yen, the dollar advanced to JPY115.42 from JPY114.34 late Wednesday.
Brent oil was quoted at USD89.88 a barrel at the London equities close from USD90.27 late Wednesday.
The stronger dollar battered gold prices. The precious metal was changing hands at USD1,794.49 an ounce at the London equities close Thursday against USD1,832.19 at the close on Wednesday.
This put further pressure on London-listed precious metals miner Fresnillo, which ended Thursday's session down 7.5% amid a host of broker ratings downgrades, including a cut to Sector Perform from Outperform at RBC. The miner on Wednesday tumbled 15% after warning production for 2022 was likely to take a hit.
Peer Polymetal International fell 5.3%. It reported 2021 gold equivalent production of 1.7 million ounces, up 2% on the year before and above guidance of 1.6 million ounces.
Elsewhere in the FTSE 100, distiller Diageo rose 2.5% as it delivered strong net sales growth during its recent half year, amid resilient consumer demand, and announced it will accelerate its capital return programme.
For the six months to December 31, the London-based distiller and brewer reported that net sales rose 16% to GBP7.96 billion from GBP6.87 billion the year before, and pretax profit was GBP2.72 billion, up 24% from GBP2.20 billion. The Johnnie Walker scotch and Smirnoff vodka maker cited resilient consumer demand, market share gains, and favourable industry trends around spirits for the growth.
Dr Martens was the worst mid-cap performer, falling 9.0% after the boot maker said wholesale sales had dropped in its financial third quarter, though revenue grew overall from the previous year.
The Wollaston, England-based footwear and clothing company reported that revenue in the three months to December 31 had grown 11% year-on-year to GBP307.0 million, as expected. It said e-commerce had seen strong growth, and retail made a good recovery.
However, as Covid hit manufacturing and global shipping, Dr Martens took the decision to prioritise inventory for direct-to-consumer sales. This caused wholesale performances to drop by 14% over the previous year. The decline of wholesales offset a strong direct-to-consumer performance in the Americas, with revenue in the region up only 4%.
Mitie rose 7.2% after lifting full-year profit guidance. The outsourcing and energy services company lifted guidance for operating profit before other items to a range of GBP160 million to GBP165 million, from its previous outlook of GBP145 million to GBP155 million.
On AIM, Fevertree fell 8.5% despite delivering an "excellent" performance in 2021 with strong growth across all its key markets.
In 2021, Fevertree said it expects to deliver revenue of GBP311 million. This represents a 23% increase on the previous year's figure of GBP252.1 million and is ahead of the company's previous guidance.
Fevertree now estimates revenue will grow to between GBP355 million and GBP365 million in 2022, which would be up as much as 17% from 2021. However, due to cost headwinds, margins are expected to remain broadly flat in 2022, resulting in an earnings before interest, tax, depreciation and amortisation range of between GBP69 million and GBP72 million. Adjusted Ebitda was GBP57.0 million in 2020, down from GBP77.0 million in 2019.
The UK corporate calendar on Friday has trading statements from Industrials REIT, Paragon Banking Group and YouGov.
The international economic calendar has German gross domestic product at 0900 GMT and eurozone business climate at 1000 GMT, followed by US core personal consumption expenditures at 1330 GMT.
By Lucy Heming;Â lucyheming@alliancenews.com
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