London midday: Stocks dip as investors mull BoJ, await Fed and BoE

19th Mar 2024 10:52

(Sharecast News) - London stocks had dipped into the red by midday on Tuesday as investors mulled the end of negative rates in Japan and looked ahead to policy announcements from the US Federal Reserve and the Bank of England this week.

The FTSE 100 was down 0.3% at 7,702.90.

Japan's central bank raised interest rates earlier, ending an eight-year policy of keeping them in negative territory in an attempt to boost economic growth.

The rise was the first in 17 years as the BoJ said it was lifting its short-term policy rate from -0.1% to between zero and 0.1%.

In 2016, the bank cut the rate below zero in an attempt to stimulate the country's stagnating economy.

Latest official data showed that even though price rises has been slowing, core consumer inflation held at the BOJ's 2% target in January.

Russ Mould, investment director at AJ Bell, said: "The Bank of Japan's monetary policy decision is hugely significant. Japan's cost of borrowing has gone up for the first time in 17 years after its wish for inflation finally came true. Japan's interest rate has been below zero since 2016 in an attempt to stimulate the economy, but it's now been lifted to a 0%-0.1% range.

"Japan's Nikkei 225 has been the best performing major market index globally over the past 12 months, up 45% and just beating the ferocious tech-heavy Nasdaq 100 index in the US which has advanced 44%. Investors have been attracted to Japan's relatively cheap valuations, the prospect of more generous dividends and as an alternative way to get Asian exposure to China which has disappointed of late.

"The key question now is whether the rate hike represents a ceiling for the index for the time being. With other countries expected to cut rates, investors lucky enough to have made money from Japan over the past year might recycle some proceeds elsewhere."

Mould said investors are likely to be sitting on their hands until the Fed unveils its latest interest rate decision tomorrow.

"A rate cut looks unlikely at this meeting so the big focus will be on economic projections and how many rate cuts we might see later in the year," he said.

Also earlier, the Reserve Bank of Australia left rates unchanged, as expected, but governor Michele Bullock warned that inflation remained at high levels. The RBA left its cash rate unchanged for a third meeting in a row at 4.35%.

Policy announcements are due from the Federal Reserve on Wednesday and the Bank of England on Thursday.

In equity markets, Unilever rallied as it announced plans to spin off its ice cream division by the end of 2025, and cut 7,500 jobs across its global operations. The consumer goods giant also said its productivity programme was expected to deliver total cost savings of around €800m over the next three years.

Close Brothers surged as it outlined measures that to strengthen its available CET1 capital by around £400m by the end of the 2025 to deal with any potential fallout from the Financial Conduct Authority's review into mis-sold car loans.

Trustpilot advanced after saying it swung to a profit in 2023 as revenue jumped 18% and user numbers rose 30%, while Puretech Health shot up as it announced a $100m capital return.

Crest Nicholson slumped as the housebuilder said it had become aware of build defects on four sites that were completed prior to 2019 that could cost it up to £15m to remediate.

Outside the FTSE 350, DFS slid after the furniture retailer cut its FY24 profit and revenue guidance as it said market demand had weakened "significantly" over the last two months following a solid start to January.

Market Movers

FTSE 100 (UKX) 7,702.90 -0.25%

FTSE 250 (MCX) 19,412.15 -0.38%

techMARK (TASX) 4,444.47 -0.34%

FTSE 100 - Risers

Unilever (ULVR) 3,943.50p 3.46%

Rightmove (RMV) 572.40p 0.88%

Standard Chartered (STAN) 655.00p 0.74%

BAE Systems (BA.) 1,314.00p 0.69%

Associated British Foods (ABF) 2,319.00p 0.65%

Shell (SHEL) 2,573.50p 0.51%

Ashtead Group (AHT) 5,226.00p 0.50%

British American Tobacco (BATS) 2,409.50p 0.44%

Admiral Group (ADM) 2,775.00p 0.43%

Rio Tinto (RIO) 4,906.50p 0.42%

FTSE 100 - Fallers

Reckitt Benckiser Group (RKT) 4,381.00p -4.24%

Fresnillo (FRES) 446.80p -3.12%

Airtel Africa (AAF) 91.55p -3.07%

Scottish Mortgage Inv Trust (SMT) 817.00p -1.92%

Burberry Group (BRBY) 1,232.00p -1.91%

Frasers Group (FRAS) 780.50p -1.89%

Entain (ENT) 761.00p -1.81%

Prudential (PRU) 774.00p -1.80%

Experian (EXPN) 3,304.00p -1.73%

Ocado Group (OCDO) 454.30p -1.71%

FTSE 250 - Risers

PureTech Health (PRTC) 221.00p 8.33%

Close Brothers Group (CBG) 358.00p 7.12%

Me Group International (MEGP) 175.00p 3.43%

W.A.G Payment Solutions (WPS) 74.20p 3.06%

AO World (AO.) 94.45p 2.38%

Bytes Technology Group (BYIT) 535.50p 2.10%

Abrdn Private Equity Opportunities Trust (APEO) 545.00p 2.06%

TP Icap Group (TCAP) 221.40p 2.03%

Wizz Air Holdings (WIZZ) 2,102.00p 1.40%

Indivior (INDV) 1,623.00p 1.18%

FTSE 250 - Fallers

Crest Nicholson Holdings (CRST) 200.00p -10.71%

Diversified Energy Company (DEC) 846.50p -8.34%

Octopus Renewables Infrastructure Trust (ORIT) 74.30p -4.99%

Essentra (ESNT) 165.80p -4.49%

Ferrexpo (FXPO) 47.72p -3.56%

Watches of Switzerland Group (WOSG) 366.80p -2.96%

Pennon Group (PNN) 644.50p -2.50%

OSB Group (OSB) 383.60p -2.29%

Investec (INVP) 490.40p -2.04%

Carnival (CCL) 1,140.50p -1.98%