LONDON MARKET CLOSE: Stocks Up As Investors Await Fed Minutes

(Alliance News) - Stocks in London ended sharply higher on Wednesday, with the FTSE 100 benefitting from weakness in the pound which remained under pressure from no-deal Brexit fears.

Markets will now be awaiting the release of minutes from the US Federal Reserve's July 30-31 meeting at 1900 BST, when the central bank cut the benchmark interest rate for the first time in more than a decade. Investors will be hoping for details on the Fed's next policy move after it presented confusing signals on whether to expect further interest rate cuts in 2019.

Markets are also looking forward to an appearance by Fed Chair Jerome Powell at a central bank's annual Jackson Hole Symposium in Wyoming, which gets underway on Thursday, with Powell speaking on Friday.

This comes in the wake of relentless attacks from US President Donald Trump on Powell, who on Wednesday disdainfully said the Fed head "is like a golfer who can't putt" and has "only let us down".

"It's quiet right now, but that will likely change in the next few days as investors parse through minutes from the Federal Reserve's July meeting and data on global manufacturing health. Fed policymakers are also scheduled to kick off the Fed's annual Economic Policy Symposium in Jackson Hole. Fed Chair Jerome Powell and other speakers are expected to provide commentary on the future of US monetary policy, an especially sensitive topic for markets after the Fed cut rates last month," said LPL Financial Research.

The overseas earnings-heavy FTSE 100 index closed up 78.97 points, or 1.1%, at 7,203.97.

The FTSE 250 ended up 199.66 points, or 1.1%, at 19,207.75, and the AIM All-Share closed up 5.25 points, or 0.6%, at 870.95.

The Cboe UK 100 ended up 1.1% at 12,202.60, the Cboe UK 250 closed up 0.9% at 17,072.97, and the Cboe Small Companies ended down 0.2% at 10,870.07.

"Ahead of this evening's potentially crucial Fed meeting minutes, investors barrelled back into the Western indices, increasingly confident that central banks will step in to try and avert a recession. The CME Group's FedWatch tool has Jerome Powell - who came in for another attack by Trump this Wednesday - and his colleagues at a 98.1% likelihood of cutting rates again in September, a number that in and of itself helps explain the market's performance this afternoon," said Spreadex analyst Connor Campbell.

The UK corporate calendar on Thursday has interim results from Irish building materials firm CRH, UAE-focused private healthcare provider NMC Health and Chilean copper miner Antofagasta. Miner South32 also releases its full-year results.

In the FTSE 100, NMC and CRH closed up 4.1% and 2.5% respectively, ahead of the half-year earnings releases.

At the other end of the large cap index, Legal & General ended down 1.3% after HSBC cut the insurer to Hold from Buy.

In the FTSE 250, Victrex closed up 5.4% after Barclays raised the speciality chemicals firm Equal Weight from Underweight.

At the other end of the the midcap index, OneSavings Bank and Charter Court Financial Services closed down 5.0% and 4.6% respectively.

Both lenders reported loan book growth ahead of their planned merger, though both saw interim profit dip.

OneSavings and Charter Court agreed an all-share merger in March, with OneSavings offering 0.8253 of a share for each Charter Court share. Under the deal, Charter Court shareholders will own 45% of the group and OneSavings the rest.

OneSavings's net loans at June 30 stood at GBP9.9 billion, 22% higher year on year from GBP8.1 billion and 10% higher from the GBP9.0 billion seen at the end of 2018. Pretax profit fell slightly to GBP91.0 million from GBP91.8 million the year before. OneSavings booked a GBP5.9 million charge in the half for expenses related to its merger with Charter Court.

Meanwhile, Charter Court saw its loan book end the half at GBP7.0 billion, 23% higher than GBP5.7 billion a year before and 4.5% higher than GBP6.7 billion at the end of 2018.

Similar to OneSavings, Charter Court's pretax profit slipped in the first half, declining 11% to GBP82.6 million from GBP93.1 million a year before. The decline included a GBP3.8 million charge from the proposed merger.

The pound was quoted at USD1.2131 at the London equities close, lower than USD1.2152 at the close Tuesday, amid no-deal Brexit fears.

UK Prime Minister Boris Johnson will head to Berlin and Paris to "see if there's movement" on the European side in a bid to break the Brexit impasse, no-deal planning chief Michael Gove said.

Johnson is set to meet German Chancellor Angela Merkel in Berlin later on Wednesday and French President Emmanuel Macron in Paris on Thursday in his first overseas trip since entering Number 10.

Merkel said she would use their talks to discuss how to achieve "the most friction-free British exit from the EU possible" in order to protect economic growth. However, Brussels insisted Johnson would not be able to undermine the EU's unity by holding bilateral meetings with the German and French leaders.

The PM has called for the backstop - the contingency measures designed to ensure a soft border with Ireland remains in all circumstances - to be scrapped.

"The central sticking point in Brexit negotiations remains the issue of the Irish border and if that condition can be overcome perhaps by simply leaving the status of the border as is and extending the talks on that point into the future while ratifying the rest of the agreement, cable would see such a solution as a major positive for the currency," said BK Asset Management's Boris Schlossberg.

On Saturday, Johnson will make his debut as UK PM at the G7 summit in the French town of Biarritz, where he will meet other world leaders including Trump.

The euro stood at USD1.1097 at the European equities close, flat against USD1.0900 late Tuesday.

Stocks in New York were higher at the London equities close, with the DJIA was up 0.9%, the S&P 500 index up 0.8% and the Nasdaq Composite up 1.0%.

The strong gains came as yields on the 10-year US Treasury note pushed higher after faltering on Tuesday. Higher yields are seen as a sign confidence in the medium-term economic outlook.

Brent oil was quoted at USD60.75 a barrel at the equities close, up from USD59.38 at the same time the prior day.

Oil was higher after the Energy Information Administration reported that US crude supplies fell by 2.7 million barrels for the week ended August 16. Consensus had expected a supply decreases of 1.9 million barrels.

Gold was quoted at USD1,503.01 an ounce at the London equities close, flat from USD1,503.09 late Tuesday.

The economic events calendar on Thursday has PMI readings from Germany at 0830 BST, the eurozone at 0900 BST and US at 1445 BST.

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