London open: FTSE nudges up as BoJ hikes rates

19th Mar 2024 08:14

(Sharecast News) - London stocks nudged higher in early trade on Tuesday as investors mulled the first rate hike by the Bank of Japan in 17 years and looked ahead to policy announcements from the US Federal Reserve and the Bank of England this week.

At 0830 GMT, the FTSE 100 was up just 0.1% at 7,726.42.

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.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "The fight against the risks of deflation in Japan is officially over, with the Bank of Japan ending its policy of negative interest rates. Aimed a conquering falling prices, ultra-loose monetary policy has been in place since 2016 and the Bank of Japan has been ultra-cautious about shifting stance, even though core inflation has been running at 2% over the year.

"But now that Japan's biggest companies, through a negotiated deal with the largest industrial union, have agreed to raise wages by 5.28%, and consumer price inflation hit 2%, the Bank has finally judged it prudent to make a move. It's hiked rates, for the first time since 2007 and also brought its yield curve control policy to an end - aimed at keeping a lid on short term and long-term government borrowing costs by buying bonds. But this doesn't necessarily mark a new era of interest rates shooting higher.

"The bank is stressing the need to keep monetary conditions pretty loose to try and boost growth in the world's second largest economy, and there are expectations that inflation has slowed."

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

Still to come this week, policy announcements are due from the Fed on Wednesday and the BoE 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 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 racked up strong gains after saying it swung to a profit in 2023 as revenue jumped 18% and user numbers rose 30%.

Crest Nicholson fell sharply 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 has weakened "significantly" over the last two months following a solid start to January.

Market Movers

FTSE 100 (UKX) 7,726.42 0.05%

FTSE 250 (MCX) 19,471.55 -0.08%

techMARK (TASX) 4,441.70 -0.40%

FTSE 100 - Risers

Unilever (ULVR) 4,028.50p 5.69%

British American Tobacco (BATS) 2,432.00p 1.38%

Rio Tinto (RIO) 4,942.50p 1.16%

Admiral Group (ADM) 2,788.00p 0.90%

Imperial Brands (IMB) 1,732.00p 0.81%

Anglo American (AAL) 1,839.60p 0.60%

Antofagasta (ANTO) 1,942.00p 0.54%

Aviva (AV.) 482.50p 0.37%

International Consolidated Airlines Group SA (CDI) (IAG) 156.95p 0.32%

Centrica (CNA) 130.05p 0.31%

FTSE 100 - Fallers

Reckitt Benckiser Group (RKT) 4,432.00p -3.13%

RS Group (RS1) 727.00p -1.20%

Flutter Entertainment (DI) (FLTR) 16,660.00p -1.07%

Frasers Group (FRAS) 787.50p -1.01%

Prudential (PRU) 780.40p -0.99%

Kingfisher (KGF) 223.30p -0.98%

Scottish Mortgage Inv Trust (SMT) 825.00p -0.96%

Airtel Africa (AAF) 93.60p -0.90%

Experian (EXPN) 3,333.00p -0.86%

Spirax-Sarco Engineering (SPX) 10,365.00p -0.86%

FTSE 250 - Risers

Close Brothers Group (CBG) 368.60p 10.29%

PureTech Health (PRTC) 221.00p 8.33%

Trustpilot Group (TRST) 215.00p 4.78%

Me Group International (MEGP) 175.00p 3.43%

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

RHI Magnesita N.V. (DI) (RHIM) 3,600.00p 2.51%

Greggs (GRG) 2,900.00p 2.33%

Tritax Eurobox (GBP) (EBOX) 52.10p 1.76%

Abrdn Private Equity Opportunities Trust (APEO) 543.00p 1.69%

Future (FUTR) 608.00p 1.50%

FTSE 250 - Fallers

Crest Nicholson Holdings (CRST) 213.60p -4.64%

Oxford Instruments (OXIG) 2,000.00p -3.85%

Diversified Energy Company (DEC) 890.00p -3.63%

Target Healthcare Reit Ltd (THRL) 77.20p -2.65%

Essentra (ESNT) 169.60p -2.30%

OSB Group (OSB) 386.00p -1.68%

AJ Bell (AJB) 295.00p -1.67%

Sirius Real Estate Ltd. (SRE) 90.05p -1.42%

Watches of Switzerland Group (WOSG) 373.60p -1.16%

Tritax Big Box Reit (BBOX) 146.10p -1.15%