London midday: Stocks up but off highs as sterling hit by Powell comments

(Sharecast News) - London stocks were off earlier highs but still in the black by midday on Tuesday, underpinned by a weaker pound, as traders returned to their desks after the bank holiday. The FTSE 100 was 0.3% firmer at 7,448.21.

Meanwhile, sterling was hovering near its lowest level against the dollar since March 2020, having hit $1.1700, amid growing concerns about the UK economy and following a hawkish speech from US Federal Reserve chair Jerome Powell.

Speaking at Jackson Hole on Friday, Powell said that getting back to price stability would "likely require maintaining a restrictive policy stance for some time".

A weaker pound tends to boost the FTSE 100 as around 70% of its constituents derives their earnings from overseas.

Russ Mould, investment director at AJ Bell, said: "The FTSE 100 started on the front foot after the Bank Holiday, having careered into the long weekend with some substantial losses after Federal Reserve chair Jerome Powell's hawkish speech at the Jackson Hole summit.

"It helps that US stocks have stabilised to some extent in the interim. Unsurprising given that many expected Powell to pour a dose of cold water on the idea that a so-called 'dovish pivot' was on the way.

"Helping the FTSE 100 is strength in the dollar relative to sterling - will forex traders be eyeing the possibility of parity between the pound and its US counterpart? A similar fate to that which befell the euro recently.

"It would take a big move to get there but as the energy crisis continues to grip the UK it doesn't feel like a scenario where you could rule anything out.

"Putin's use of Russian gas supplies as a proxy front in the current conflict with Ukraine continues to add to the supply pressures in the energy market and ramps up the pressure as winter starts to approach."

On the macro front, Pantheon Macroeconomics said figures from the Bank of England released earlier showed that households are still saving less and borrowing more, but that this alone won't prevent a recession this winter.

House purchase mortgage approvals edged up to 63,800 in July from 63,200 in June, coming above consensus expectations of 62,000. Meanwhile, net consumer credit rose by £1.4bn in July, above its 2015-to-19 average of £1.3bn, but slightly below consensus expectations of £1.5bn.

In equity markets, banks were among the top performers amid the prospect of higher rates, with Barclays, Lloyds, HSBC and Standard Chartered all up.

Dechra Pharmaceuticals rallied as it announced the acquisition of California -based veterinary pharmaceutical manufacturer Med-Pharmex for $260m (£221.5m).

Bunzl slumped even as it lifted its full-year margin outlook and posted a jump in first-half profit and revenue as product cost inflation and volume growth more than offset an expected decline in Covid-related sales.

AstraZeneca was also in the red even as clinical trial results showed that its Farxiga treatment against Type II diabetes significantly reduced the risk of cardiovascular death or worsening of heart failure in patients with mildly reduced or preserved ejection fraction.

Market Movers

FTSE 100 (UKX) 7,448.21 0.28% FTSE 250 (MCX) 19,328.11 0.83% techMARK (TASX) 4,383.88 0.33%

FTSE 100 - Risers

Barclays (BARC) 167.96p 3.62% JD Sports Fashion (JD.) 113.60p 3.60% Kingfisher (KGF) 237.70p 3.26% Dechra Pharmaceuticals (DPH) 3,548.00p 3.14% Standard Chartered (STAN) 608.00p 3.12% Next (NXT) 5,894.00p 2.83% HSBC Holdings (HSBA) 536.40p 2.56% Smurfit Kappa Group (CDI) (SKG) 2,869.00p 2.39% Pershing Square Holdings Ltd NPV (PSH) 2,820.00p 2.36% Burberry Group (BRBY) 1,774.50p 2.28%

FTSE 100 - Fallers

Bunzl (BNZL) 2,934.00p -5.81% NATWEST GROUP (NWG) 254.60p -5.77% Endeavour Mining (EDV) 1,684.00p -5.50% Centrica (CNA) 79.26p -3.29% Haleon (HLN) 258.80p -2.82% Fresnillo (FRES) 709.20p -2.61% SSE (SSE) 1,757.00p -2.52% Harbour Energy (HBR) 480.70p -2.32% Antofagasta (ANTO) 1,149.00p -2.13% Glencore (GLEN) 488.50p -2.08%

FTSE 250 - Risers

Polymetal International (POLY) 219.00p 9.50% Molten Ventures (GROW) 389.40p 5.47% Quilter (QLT) 109.20p 5.15% Dr. Martens (DOCS) 247.20p 4.92% Aston Martin Lagonda Global Holdings (AML) 449.60p 4.90% ASOS (ASC) 730.00p 4.73% Royal Mail (RMG) 279.20p 4.57% Helios Towers (HTWS) 130.30p 4.16% Currys (CURY) 63.50p 4.10% IP Group (IPO) 71.65p 4.07%

FTSE 250 - Fallers

Drax Group (DRX) 675.00p -4.46% 888 Holdings (DI) (888) 124.40p -3.27% Telecom Plus (TEP) 1,960.00p -2.24% Centamin (DI) (CEY) 90.70p -2.18% Darktrace (DARK) 514.00p -2.02% Mitie Group (MTO) 73.20p -1.61% Ascential (ASCL) 216.20p -1.55% Monks Inv Trust (MNKS) 1,042.00p -1.23% Ferrexpo (FXPO) 153.40p -1.16% ICG Enterprise Trust (ICGT) 1,080.00p -1.10%