London’s FTSE 100 was on the decline, with UK public finances in focus after remarks on tax by the chancellor, while the luxury goods sector was the star of the show, sending the Paris market higher.
The FTSE 100 index was down 54.21 points, 0.6%, at 9,398.56. The FTSE 250 was up just 0.88 points at 22,029.06, and the AIM All-Share was up 1.27 points, 0.2%, at 790.83.
The Cboe UK 100 was down 0.4% at 940.49, the Cboe UK 250 was flat at 19,295.35, and the Cboe Small Companies was 0.5% higher at 17,786.69.
In Paris, the CAC 40 powered 2.4% higher and the DAX 40 in Frankfurt added 0.1%.
Sterling rose to $1.3357 on Wednesday afternoon, from $1.3294 at the time of the London equities close on Tuesday. The euro climbed to $1.1622 from $1.1591. Against the yen, the dollar retreated to JP¥151.39 from JP¥151.83.
The yield on the 10-year US Treasury narrowed to 4.02% from 4.05%. The 30-year yield slimmed to 4.61% from 4.64%.
In New York, the Dow Jones Industrial Average is called up 0.4%, the S&P 500 up 0.6% and the Nasdaq Composite up 0.8%.
‘Markets have been lifted by the rekindling of rate cut expectations in the US after comments from Fed chair Jerome Powell which highlighted sluggish hiring were taken as an indication that not one, but two further cuts were very much on the table for 2025,’ AJ Bell analyst Danni Hewson commented.
‘Buoyed by continued deal making in the frothy AI sector, investors seem prepared to overlook the growing number of warnings about the potential for a market correction at the moment, but this earnings season will be crucial if that optimism is to continue.’
Federal Reserve Chair Jerome Powell warned that the risks to employment have risen in recent months, noting a sharp slowdown in job creation.
‘While the unemployment rate remained low through August, payroll gains have slowed sharply, likely in part due to a decline in labour force growth due to lower immigration and labour force participation,’ he told a conference in Philadelphia, according to prepared remarks.
Powell also hinted that the Fed could soon stop reducing the size of its balance sheet, which ballooned in the early days of the Covid-19 pandemic as the US central bank piled into Treasuries and mortgage-backed securities to support the economy.
‘Our long-stated plan is to stop balance sheet runoff when reserves are somewhat above the level we judge consistent with ample reserve conditions,’ he said. ‘We may approach that point in coming months.’
A barrel of Brent rose to $62.31 midday Wednesday, from $61.87 at the time of the London equities close on Tuesday. Gold surged to $4,199.27 an ounce, from $4,141.29. It had hit a new record high above $4,218 earlier Wednesday.
In London, the FTSE 100’s largest constituents traded mostly lower, keeping the index at bay. drugmaker AstraZeneca lost 2.2%, lender HSBC was down 0.3% and shares in oil major Shell barely budged. Consumer goods firm Unilever declined 1.5%, while jet engine maker Rolls-Royce declined 0.9%.
That was a contrast to the CAC 40 in Paris, which saw its largest components rise. LVMH soared 15% after a well-received trading statement on Tuesday, helping to boost luxury peer Hermes, which climbed 6.6%.
Burberry was the best FTSE 100 performer, up 6.4%, also in a positive LVMH read across.
Analysts at Deutsche Bank commented: ‘The investor hope is that LVMH, and potentially the wider Luxury sector, has turned the corner.’
Concerns over UK public finances also hurt the London market.
Rostro analyst Joshua Mahony commented: ‘The FTSE 100 has lagged in early trade, weighed down by renewed fiscal concerns after the chancellor warned of significant tax rises and spending cuts that could go further than required to plug the public finance gap. While such measures may reduce the risk of repeated tax hikes later in her tenure, they also raise fears of fresh pressure on UK growth. The IMF offered some encouragement with an upgraded 2026 growth forecast of 1.3%, but with inflation restricting Bank of England support, and fiscal tightening on the horizon, the outlook for a meaningful improvement in momentum remains limited.’
British Land shares rose 4.5%. It reiterated its annual guidance as it reported growth in half-year profit and in portfolio and rental values.
British Land said underlying profit rose 8.4% to £155 million in the six months that ended September 30 from £143 million a year prior, with underlying earnings per share of 15.4 pence, up 0.7% from 15.3p.
Portfolio value increased by 1.2%, with Retail & London Urban Logistics up 1.6% and Campuses up 0.9%.
ActiveOps soared 27% on AIM. It t reported ‘solid’ interim revenue growth and guided full-year revenue ‘comfortably ahead’ of consensus.
The management process automation software provider said it anticipates revenue growth of between 45% and 50% at constant currency to around £20.8 million for the six months that ended September 30, from £14.3 million a year earlier.
Looking ahead to the full-year ending March 31, ActiveOps anticipates revenue landing ‘comfortably ahead’ of consensus expectations of £40.3 million.
Over in Amsterdam, ASML shares climbed 4.3%. It reported a modest rise in third-quarter profit and reaffirmed its full-year outlook, as demand for advanced chipmaking tools offset a slowdown in sales to China.
The Veldhoven, Netherlands-based semiconductor manufacturer said net income increased 2.3% to €2.13 billion in the three months to September 30 from €2.08 billion a year earlier. Basic earnings per share rose to €5.49 from €5.28.
Total net sales edged up 0.7% year-on-year to €7.51 billion from €7.47 billion.
Quarterly net bookings came in at €5.4 billion, more than double the €2.63 billion recorded a year earlier.
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