LONDON MARKET OPEN: FTSE 100 shakes off mining drag as US Fed looms

(Alliance News) - London stocks rose at the start of trade on Wednesday as investors brace for a US interest rate decision due later in the day from the Federal Reserve, as the UK added to a global picture of rising inflation.

The Federal Open Market Committee will conclude its two-day meeting on Wednesday and announce its decision at 1900 BST. This will be followed by a press conference with Fed Chair Jerome Powell at 1930 BST.

"The Federal Reserve takes centre stage later, with investors on high alert for any changes in outlook," said Richard Hunter, head of markets at Interactive Investor.

"The accompanying comments from the Fed meeting will be closely scrutinised, with further evidence of a strengthening recovery and inflationary pressures guiding the next steps...The expectation is that the subject of tapering some of the relief has at least made its way to the table for discussion, if not immediate action," Hunter added.

The FTSE 100 index was up 30.01 points, or 0.4%, at 7,202.49 early Wednesday. The mid-cap FTSE 250 index was up 84.83 points, or 0.4%, at 22,716.55. The AIM All-Share index was flat at 1,244.47.

The Cboe UK 100 index was up 0.5% at 717.72. The Cboe 250 was up 0.3% at 20,448.23, and the Cboe Small Companies up 0.1% at 15,316.83.

In mainland Europe, the CAC 40 in Paris was up 0.3%, while the DAX 30 in Frankfurt was up 0.1% early Wednesday.

In Asia on Wednesday, the Japanese Nikkei 225 index ended down 0.5%. In China, the Shanghai Composite closed down 1.1%, while the Hang Seng index in Hong Kong was 0.7% lower in late trade. The S&P/ASX 200 in Sydney closed up 0.1%.

The dollar softened as the Fed decision loomed.

Sterling was quoted at USD1.4118 early Wednesday, rising from USD1.4088 at the London equities close on Tuesday, as figures showed UK annual consumer price growth topped the Bank of England's 2% target for the first time in nearly two years.

The Office for National Statistics said the UK consumer price index jumped 2.1% on an annual basis in May, accelerating from 1.5% growth in April.

May's annual inflation print was the highest reading since the same 2.1% growth rate was registered in July 2019. Consumer price growth has remained below 2% ever since then.

The euro traded at USD1.2131, firm on USD1.2127 late Tuesday. Against the yen, the greenback fell to JPY109.92 versus JPY110.08.

Gold was quoted at USD1,860.29 an ounce early Wednesday, flat compared to USD1,860.80 on Tuesday. Brent oil was trading at USD74.37 a barrel, higher than USD73.70 late Tuesday.

In London, miners were acting as a slight drag on the FTSE 100 after Chinese industrial production for May disappointed. Output grew just 8.8% in May, slowing from 9.8% in April and undershooting market forecasts for growth of 9%, according to FXStreet.

Glencore was the worst blue-chip performer, down 2.2%, while Anglo American fell 1.6% and BHP pulled back 1.0%.

In the FTSE 250, Hipgnosis Songs Fund fell 1.5% as it unveiled plans for a placing to snap up a "substantial" pipeline of songs.

The music investment company is looking to raise GBP150 million via a share placing priced at 121p per share. The price represents a discount of 2.4% to Tuesday's closing price.

Hipgnosis expects to use the funds to buy a "substantial" pipeline of songs identified by its investment adviser. The pipeline contains "some of the most influential and successful songs of all time", it asserted.

"This raise gives our public markets investors, historic and new, the only chance for the next 12 months to get access to Hipgnosis' existing portfolio as well as a pipeline comprising some of the most important and successful songs of all time, at valuations that are highly attractive considering the continued explosive growth of streaming that will magnify future revenues considerably," said Merck Mercuriadis, founder of Hipgnosis as well as of The Family (Music), its investment adviser.

ScS shares surged 12% as the sofa retailer boosted its outlook and resumed payouts following a strong year-to-date sales performance.

Like-for-like order intake in the 46 weeks to June 12 was up 11% year-on-year. As the upholstered furniture and floorings retailer's stores reopened in April, it saw like-for-like orders explode in the period stretching from April 4 to June 12, up nearly five-fold - also noting that stores were shut for the majority of the same period a year ago. Sales in the recent 10 weeks were up 79% from 2019.

As a result of strong trading, ScS now expects its full-year performance to top market forecasts. Further, it said it now has the confidence to recommence dividends, starting with an interim payout of 3.0p per share.

"The group has a robust balance sheet and the re-introduction of dividends today reflects the board's confidence in the business going forward. As such, and given the strength of the current order book, the board's outlook for FY22 is substantially better than current market forecasts," it said.

Meanwhile, online furniture retailer Made.com was trading at 193.94p as it debuted in London, down 3.0% from its 200p IPO price.

"A listing in London, where the business was founded, will enable us to accelerate our growth as we lead the development of the online furniture and homewares market as it moves online, both in the UK and internationally," said Chief Executive Philippe Chainieux.

Conditional dealings in Made.com shares commenced on Wednesday and unconditional dealings will follow on Monday. Made.com expects to be eligible for inclusion in FTSE indices.

By Lucy Heming; lucyheming@alliancenews.com

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