London open: Stocks rise ahead of Fed announcement

(Sharecast News) - London stocks rose in early trade on Wednesday despite concerns about inflation, helped along by some encouraging data out of China, amid expectations the US Federal Reserve will announce its biggest rate hike since 1994. At 0835 BST, the FTSE 100 was up 0.6% at 7,233.19.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "Financial markets have been beset with shivers of anticipation of more aggressive interest rate moves, and as the clock ticks down to the key Federal Reserve meeting later, nerves are set to stay frayed.

"The jitters have sent the Nikkei in Japan lower but Chinese data indicating a better recovery than expected after some Covid lockdowns eased, has helped lift the Hang Seng in Hong Kong and the Shanghai Composite. Industrial output rose 0.7% in May from a year earlier, after falling 2.9% in April. This is likely to support commodity stocks like miners but any ripples of relief are set to be short-lived. Retail sales are slow to recover, still down 6.7% on the year in May, which doesn't bode so well for luxury goods manufacturers."

Streeter said expectations have risen that policymakers in the US will slam on the brakes hard with a 75 basis points rate hike, to stop prices spiralling out of control.

"High hopes that inflation could soon be in retreat have been dashed after the US Producer Prices Index soared by 10.8% in May as energy costs soared. The worry persists that a more aggressive attitude by the Federal Reserve will see growth go into reverse and could set off a slow motion crash into recession, with troublesome repercussions for global growth.

"The red warning lights have begun flashing after the closely watched US government bond yield curve briefly inverted yesterday. The yields on 2-year Treasuries rose above 10-year borrowing costs - a development which has regularly signalled a coming recession. The curve is still worryingly flat, with the yield on 2-year Treasuries at around 3.35% and 10-year bonds only a nudge above with a yield of 3.40%."

In equity markets, discount retailer B&M European Value was the top performer on the FTSE 100 after an upgrade to 'overweight' at Barclays.

LSE also racked up strong gains after an upgrade to 'buy' at UBS, which said the stock's current valuation offers "very favourable" risk/reward for one that can grow revenue at about 5% a year.

Premier Inn owner Whitbread gained after it said first-quarter trading beat expectations, as demand continued to rebound following the worst of the pandemic.

WH Smith rallied after saying it expects annual results to be at the upper end of expectations as it reported a surge in revenue over pre-Covid pandemic levels for the first time, driven by a recovery in the travel market.

On the downside, Abrdn was knocked lower by a downgrade to 'underperform' at Credit Suisse.

Chilean copper miner Antofagasta fell as it said that full-year production was set to be at the bottom end of guidance following a leak in the concentrate pipeline at the Los Pelambres mine, and subsequent shutdown.

Market Movers

FTSE 100 (UKX) 7,233.19 0.64% FTSE 250 (MCX) 19,264.34 1.15% techMARK (TASX) 4,235.46 0.78%

FTSE 100 - Risers

B&M European Value Retail S.A. (DI) (BME) 375.20p 3.88% London Stock Exchange Group (LSEG) 6,994.00p 3.80% Smurfit Kappa Group (CDI) (SKG) 2,910.00p 3.60% Whitbread (WTB) 2,650.00p 3.27% Smith (DS) (SMDS) 293.40p 2.62% NATWEST GROUP PLC ORD 100P (NWG) 227.00p 2.53% Ocado Group (OCDO) 802.80p 2.32% Dechra Pharmaceuticals (DPH) 3,236.00p 2.28% Aviva (AV.) 412.20p 2.00% Phoenix Group Holdings (PHNX) 619.00p 1.98%

FTSE 100 - Fallers

Abrdn (ABDN) 165.30p -2.42% BP (BP.) 427.65p -1.68% Shell (SHEL) 2,281.50p -1.15% Antofagasta (ANTO) 1,382.00p -0.79% Anglo American (AAL) 3,436.00p -0.55% Harbour Energy (HBR) 361.90p -0.41% Rentokil Initial (RTO) 451.50p -0.20% Fresnillo (FRES) 792.20p -0.18% BAE Systems (BA.) 774.40p -0.05% SEGRO (SGRO) 954.80p 0.00%

FTSE 250 - Risers

WH Smith (SMWH) 1,430.50p 5.30% Dr. Martens (DOCS) 250.00p 4.87% Hilton Food Group (HFG) 1,050.00p 4.37% Fidelity Special Values (FSV) 274.50p 3.98% Baltic Classifieds Group (BCG) 138.20p 3.29% Cranswick (CWK) 3,008.00p 3.08% TR Property Inv Trust (TRY) 402.00p 3.08% Games Workshop Group (GAW) 6,275.00p 3.04% Centrica (CNA) 78.26p 2.84% Mitie Group (MTO) 63.00p 2.77%

FTSE 250 - Fallers

Polymetal International (POLY) 215.00p -2.54% Wood Group (John) (WG.) 191.65p -1.72% Babcock International Group (BAB) 354.20p -1.61% Sirius Real Estate Ltd. (SRE) 101.60p -1.36% VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 485.00p -1.12% Network International Holdings (NETW) 182.20p -0.92% Carnival (CCL) 717.80p -0.91% Coats Group (COA) 70.30p -0.85% 888 Holdings (888) 176.00p -0.79% Discoverie Group (DSCV) 700.00p -0.57%