London midday: Stocks extend gains as BoJ calms investors

7th Aug 2024 10:58

(Sharecast News) - London stocks had extended gains by midday on Wednesday as comments from Bank of Japan governor Shinichi Uchida calmed investors.

The FTSE 100 was up 1.1% at 8,111.62 .

Sentiment got a boost after Uchida said the central bank would not lift interest rates when the markets are unstable, in response to this week's volatility that saw a massive sell-off in equities.

"I believe that the bank needs to maintain monetary easing with the current policy interest rate for the time being, with developments in financial and capital markets at home and abroad being extremely volatile," Uchida told business leaders in a speech.

He added that the BoJ's interest rate path would "obviously" change if market volatility affected its economic and price outlook, its view on risks, and the likelihood of durably achieving its 2% inflation target.

"In contrast to the process of policy interest rate hikes in Europe and the United States, Japan's economy is not in a situation where the bank may fall behind the curve if it does not raise the policy interest rate at a certain pace," Uchida said.

"Therefore, we won't raise interest rates when financial markets are unstable," Uchida said.

Russ Mould, investment director at AJ Bell, said: "The FTSE 100 took succour from a continued recovery in Asian and US stocks overnight to trade appreciably higher on Wednesday morning.

"Although with warnings that the unwinding of carry trades - seeing people borrow at low cost in one currency to achieve higher returns from investments in another - are still to fully play out, there remains an air of tension around financial markets.

"Helping to provide at least a measure of calm was the Bank of Japan. Deputy governor Shinichi Uchida signalled there was no plan to increase interest rates further 'for the time being' after the yen surged on the second Japanese rate hike in 17 years last week."

On home shores, investors mulled the latest data from Halifax, which showed that house prices rose in July after three flat months.

Prices were up 0.8% on the month, coming in comfortably ahead of expectations for 0.3% growth.

On the year, house prices rose 2.3% in July following a 1.9% increase in June. This marked the highest annual growth rate since January 2024.

The average house price stood at £291,268 compared to £289,042 in June.

Amanda Bryden, head of mortgages at Halifax, said: "Last week's Bank of England's Base Rate cut, which follows recent reductions in mortgage rates, is encouraging for those looking to remortgage, purchase a first home or move along the housing ladder. However, affordability constraints and the lack of available properties continue to pose challenges for prospective homeowners.

"Against the backdrop of lower mortgage rates and potential further Base Rate reductions, we anticipate house prices to continue a modest upward trend throughout the remainder of this year."

In equity markets, banks were among the top performers, with StanChart, NatWest and Barclays all higher.

Vodafone gained as it announced the launch of a share buyback programme of up to €500m (£430m).

Legal & General advanced as the financial services and asset management firm posted interim operating profit that beat analyst forecasts, driven by higher annuity sales.

TP Icap surged as it announced the launch of a third share buyback programme of £30m and posted a 10% jump in interim adjusted pre-tax profit.

Quilter also racked up strong gains as it reported record first-half adjusted profits.

On the downside, WPP slumped as the advertising giant cut its full-year like-for-like revenue growth forecast. The company put this down to pressure in China and in its project-related businesses, as well as an uncertain macro environment.

Coca-Cola HBC fizzed lower even as it lifted full-year guidance after a "strong" first half.

Glencore lost ground as it posted a drop in half-year profits and said it will keep its coal and carbon steel business.

Hiscox was weaker as it reported a rise in first-half pre-tax profit despite what it described as "a more active loss environment".

Market Movers

FTSE 100 (UKX) 8,111.62 1.06%

FTSE 250 (MCX) 20,539.44 0.84%

techMARK (TASX) 4,734.97 0.66%

FTSE 100 - Risers

CRH (CDI) (CRH) 6,268.00p 4.61%

Entain (ENT) 525.00p 4.25%

Standard Chartered (STAN) 713.00p 3.78%

Ashtead Group (AHT) 5,292.00p 3.72%

Vistry Group (VTY) 1,309.00p 3.07%

Persimmon (PSN) 1,546.50p 3.00%

NATWEST GROUP (NWG) 332.60p 2.97%

Vodafone Group (VOD) 72.46p 2.87%

Barclays (BARC) 213.90p 2.74%

Pershing Square Holdings Ltd NPV (PSH) 3,582.00p 2.69%

FTSE 100 - Fallers

WPP (WPP) 699.40p -2.45%

InterContinental Hotels Group (IHG) 7,288.00p -1.65%

Coca-Cola HBC AG (CDI) (CCH) 2,712.00p -1.02%

Sage Group (SGE) 1,008.00p -0.98%

Smith (DS) (SMDS) 443.40p -0.45%

easyJet (EZJ) 422.40p -0.40%

Compass Group (CPG) 2,328.00p -0.34%

Land Securities Group (LAND) 617.50p -0.24%

Rio Tinto (RIO) 4,905.50p -0.15%

Pearson (PSON) 1,038.00p -0.14%

FTSE 250 - Risers

TP Icap Group (TCAP) 223.00p 5.69%

CMC Markets (CMCX) 305.50p 4.98%

Ibstock (IBST) 180.60p 4.88%

International Workplace Group (IWG) 172.40p 3.54%

Ocado Group (OCDO) 394.10p 3.33%

Quilter (QLT) 131.70p 3.29%

Wood Group (John) (WG.) 133.00p 3.26%

Keller Group (KLR) 1,588.00p 3.25%

W.A.G Payment Solutions (WPS) 64.00p 3.23%

Plus500 Ltd (DI) (PLUS) 2,372.00p 3.13%

FTSE 250 - Fallers

Hiscox Limited (DI) (HSX) 1,121.00p -4.11%

Auction Technology Group (ATG) 449.00p -3.02%

Abrdn (ABDN) 154.50p -2.65%

4Imprint Group (FOUR) 5,490.00p -2.31%

C&C Group (CDI) (CCR) 152.00p -1.43%

NB Private Equity Partners Ltd. (NBPE) 1,600.00p -1.11%

AO World (AO.) 110.80p -1.07%

AJ Bell (AJB) 417.00p -1.07%

Clarkson (CKN) 3,765.00p -1.05%

Worldwide Healthcare Trust (WWH) 354.00p -0.98%