LONDON MARKET CLOSE: Stocks rise ahead of US Fed meeting minutes

(Alliance News) - Stocks in London ended mostly higher on Wednesday as market participants look ahead to the latest minutes from the US Federal Reserve at 1900 BST.

Investors are awaiting the Fed's next move on interest rates, with expectations for more half-point hikes to come as officials struggle to bring inflation down from four-decade highs.

At its most recent meeting, the Fed decided to raise interest rates by 50 basis points, as expected.

It was the first time the US central bank had hiked rates by a half-point in one step since 2000, and it took the federal funds rate to a range of 0.75% to 1.00%.

The FTSE 100 index closed up 38.40 points, or 0.5%, at 7,522.75. The mid-cap FTSE 250 index closed up 84.22 points, or 0.4%, at 19,934.04. The AIM All-Share index closed down 2.36 points, or 0.3%, at 952.93.

The Cboe UK 100 index closed up 0.6% at 750.63. The Cboe 250 ended up 0.4% at 17,675.79 and the Cboe Small Companies finished 0.3% lower at 14,567.59.

In mainland Europe, the CAC 40 stock index in Paris closed up 0.7%, while the DAX 40 in Frankfurt ended 0.6%.

"Traders are a little optimistic ahead of the release of the minutes from the recent Federal Reserve meeting, where rates were hiked by 0.5%. In March, the US central bank lifted rates by 25 basis points, so the 50-basis hike a few weeks ago showed us the bank are determined to tackle the high level of inflation," said Equiti Capital analyst David Madden.

In the FTSE 100, SSE ended the best performer, up 5.7%, after the power utility reported rising earnings and lifted its payout.

In the financial year that ended March 31, revenue climbed 42% to GBP16.91 billion from GBP11.87 billion. Pretax profit rose 44% to GBP3.48 billion from GBP2.42 billion. Adjusted earnings per share grew by 22% to 95.4 pence, within guidance, from 78.4p.

The adjusted EPS figure has been tipped to rise to "at least" 120p for the new year. For the five-year period to financial 2026, it expects compound annual adjusted EPS growth of between 7% and 10%.

SSE hiked its payout by 5.8% to 85.7p from 81.0p. SSE recently kicked off plans for a sales process for its SSEN Transmission arm. This is expected to formally begin in the summer. SSE plans to sell a 25% stake in the electricity transmission network unit.

Imperial Brands closed up 3.6% after Goldman Sachs raised the tobacco company to 'buy' from 'neutral'.

At the other end of the large-caps, JD Sports Fashion ended the worst performer down 6.1%, after the athletic apparel retailer, just before the market close, said Executive Chair Peter Cowgill will step down with immediate effect following long-standing corporate governance issues.

JD said Helen Ashton and Kath Smith will become interim non-executive chair & interim chief executive officer respectively.

The retailer said the reshuffle was a consequence of a continuing review of its internal governance and controls, as it decided to accelerate the separation of the roles of chair and chief executive.

Severn Trent ended the second worst performer, down 3.1%. The water company reported increases in revenue and profit despite upward pressure on power and chemical costs as non-household consumption returned to pre-pandemic levels.

The Coventry-based company reported pretax profit of GBP506.2 million in the year ended March 31, up 7.5% against the GBP470.7 million achieved the prior year.

Turnover climbed 6.4% to GBP1.94 billion from GBP1.83 billion as non-household consumption returned to pre-pandemic levels and household consumption lowered. Severn Trent added that this figure was at the top of its expected range.

Looking forward, Severn Trent said it expects turnover for the current financial year to be between GBP1.97 billion and GBP2.02 billion. This would result in between 1.4% to 3.9% turnover growth year-on-year if achieved.

Prudential lost 2.1%. The insurer hired Manulife Financial Corp executive Anil Wadhwani as its new chief executive following the retirement of Mike Wells.

Wadhwani currently serves at Toronto-headquartered Manulife as CEO of Manulife Asia. Manulife operates in Canada and Asia as Manulife and in the US primarily through its John Hancock Financial unit.

Prior to Manulife, Wadhwani spent over two decades at Citigroup. He will take up the Prudential role on February 25 next year. Wadhwani is stepping into the role after Mike Wells retired earlier this year, with Mark FitzPatrick currently serving as interim CEO.

In the FTSE 250, Pets at Home ended the best performer, up 13%, after the pet products retailer posted a surging profit thanks to its "resilient" pet care unit as a boom in pet ownership helped it propel to record sales growth.

Pretax profit for the financial year March 31 rose 40% to GBP148.7 million from GBP106.3 million a year ago. Revenue climbed to GBP1.32 billion from GBP1.14 billion.

The Cheshire, England-based retailer declared a final dividend of 7.5 pence, bringing the total dividend to 11.8p per share, up 48% from 8.0p.

Meanwhile, British Gas-owner Centrica and chemical firm Johnson Matthey are set to return to the FTSE 100 index next month, replacing television broadcaster ITV and postal operator Royal Mail, according to indicative changes released by FTSE Russell on Tuesday.

All four companies have been in and out of London's blue-chip list in recent years. Meanwhile, online fashion retailer Asos will join the FTSE 250, following its move to the London Main Market from AIM. JLEN Environmental Assets Group replaced Clipper Logistics in the FTSE 250 on Tuesday, after GXO Logistics completed its acquisition of Clipper.

Elsewhere, Angle surged 61% after the medical diagnostics company said the US Food & Drug Administration cleared its Parsortix system for patients with metastatic breast cancer.

The pound was quoted at USD1.2547 at the London equities close, up from USD1.2518 at the close Tuesday.

The euro stood at USD1.0678 at the European equities close, down from USD1.0725. Against the yen, the dollar was trading at JPY127.31, up from JPY126.67.

Stocks in New York were higher at the London equities close. The DJIA was up 0.4%, the S&P 500 index up 0.6% and the Nasdaq Composite up 0.9%.

Major indices have fallen throughout most of 2022 so far, prompting debate on whether the market has bottomed out or is close to doing so.

Brent oil quoted at USD113.93 a barrel at the equities close, marginally lower from USD113.97 at the close Tuesday.

Gold stood at USD1,850.30 an ounce at the London equities close, lower against USD1,866.09 late Tuesday.

The economic events calendar on Thursday has US economic growth figures and the latest jobless claims numbers at 1330 BST.

The UK corporate calendar on Thursday has annual results from online automotive platform Auto Trader, water company United Utilities, speciality chemicals firm Johnson Matthey and stockbroker AJ Bell.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

Copyright 2022 Alliance News Limited. All Rights Reserved.