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Wall Street and FTSE push higher ahead of Federal Reserve interest rate decision

Wall Street stormed higher on Wednesday, taking its lead from the FTSE 100 (^FTSE) and European stocks as traders digested the latest eurozone inflation data for July.

According to a flash estimate by Eurostat, the EU’s statistics agency, eurozone inflation rose slightly faster than expected in the year to July. Prices rose to a 2.6% annual rate,

This was up from 2.5% in June and higher than the 2.4% expected by economists, and above the ECB’s 2% target.

Investors will also have their eyes the Federal Reserve interest rate announcement later on Wednesday and whether the central bank signals a September rate cut, as well as reviewing the latest corporate earnings.

Julien Lafargue, chief market strategist at Barclays Private Bank, said: “We expect the US Federal Reserve to open the door to a first interest rate cut in September.”

In a busy week for central bank decision making, Japan also took another step towards normalising its monetary policy by hiking interest rates to 0.25%.

  • London’s benchmark index was 1% higher on the day with mining companies the main gainers — helped in particular by a 2% increase in copper prices.

  • Germany’s DAX (^GDAXI) rose 0.4% and the CAC (^FCHI) in Paris headed 0.8% into the green.

  • The pan-European STOXX 600 (^STOXX) was up 0.8%.

  • Wall Street opened higher, spurred on by chip giants.

  • The pound was 0.1% up against the US dollar (GBPUSD=X) at 1.2847.

  • Worst airline in UK for customer service revealed.

Pierre Veyret, technical analyst at ActivTrades, said: “Equity markets climbed in Europe on Wednesday as dovish hopes boosted market sentiment ahead of the Fed’s monetary decision.

“The latest slew of reassuring economic data from the old continent, which saw positive GDP and lower inflation figures, has renewed risk appetite and induced investors to buy the dip in EU assets.

“This led the STOXX-50 index to clear a significant short-term resistance level, as prices now challenge the 4,900pts level, with tech and industrial shares as the top performers.”

Follow along for live updates throughout the day:

LIVE COVERAGE IS OVER22 updates

  • Blog close

    Well that’s all we have time for today, thanks for following along. Be sure to join us again tomorrow when we’ll be back for more.

    It’s Bank of England decision day tomorrow so be sure to tune in for all the coverage and market reactions. We will also be filling you in with what happened with the Federal Reserve’s decision this evening.

    Have a good one!

  • US firms add fewer jobs

    US companies added fewer jobs than expected over the last month in a boost to hopes that the US Federal Reserve will begin cutting interest rates in September.

    The Telegraph has the details…

    The ADP Employment Report showed private sector employment increased by 122,000 jobs in July, which was down from the upwardly revised 155,000 the previous month.

    It was also lower than than the 150,000 figure expected by economists, indicating that the US jobs market is slowing down.

    ADP chief economist Nela Richardson said:

    “With wage growth abating, the labour market is playing along with the Federal Reserve’s effort to slow inflation. If inflation goes back up, it won’t be because of labour.

  • US pay growth slows

    Pay and benefits for workers in the US grew more slowly in the quarter to June.

    Compensation as measured by the government’s Employment Cost Index rose 0.9% in the three months, down from a 1.2% increase in the first three months of the year, according to the Labour Department.

    Compared with the same quarter a year earlier, compensation growth was 4.1%, a slight drop from 4.25 in the first quarter.

    Higher wages and benefits are good for employees, but slower pay growth will likely reassure Fed officials that inflation is steadily falling back to their 2pc target.

    Rapid wage growth can lead many businesses to raise their prices to offset the higher labour costs.

  • Savers ditch personal pensions as cost of living crisis bites

    The number of people making individual contributions to a personal pensions decreased to 6.76 million in 2022 to 2023 from 7.44 million in 2021 to 2022, according to private pension statistics today from HM Revenue and Customs.

    The data also showed that in 2023 to 2024, £15.3bn in taxable payments was withdrawn from pensions flexibly. This has increased from £12.9bn in 2022 to 2023 and £11.2bn in 2021 to 2022.

    Adrian Lowery, financial Analyst at wealth management firm Evelyn Partners, said:

    “Personal pension numbers are back below the pandemic-depressed figure of 6.84 million that was recorded in 2020/21, and it’s surprising because in 2021/22 the number of scheme members recovered a bit to 7.44 million as the shock of COVID wore off. This suggests the cost of living crisis continues to weigh on pension savings.

    “You might expect membership of personal pensions to rise year-by-year, financial shocks aside, as the population grows and awareness of the need for private pension provision spreads. So it just goes to show the fragility of personal pension saving when there are so many other calls on household finances, and it could well be that soaring mortgage costs in 2022/23 pressured savers into rowing back on their pension commitments and ditching policies.

    “This 8% drop in numbers saving into a personal pension is revealed at a key moment in the national debate over tax reliefs. Should the Chancellor decide to try to plug holes in the public finances by watering down pension tax relief, there is the danger that people will turn away from pension saving as major incentives are removed. At a time when the demands on retirees’ funds threaten to grow ever higher – only this week a planned cap on care costs was ditched – the prospects for some could be bleak.”

  • How to manage your finances like an Olympian

    The Olympics is underway, with incredible athletes from around the world pushing themselves to the limit in the pursuit of sporting excellence.

    For the rest of us, for whom the limit of our sporting excellence is running for a bus, you’d be forgiven for thinking that these Olympians have nothing to do with our lives, but their example can teach us five valuable lessons about our finances.

    Olympians were traditionally amateurs, and while this rule was dropped in the 1980s, for decades, competitors were juggling their training alongside their jobs (and some still do).

    We might tell ourselves we’re too exhausted to get anything done after a long day at work, but they came home and then trained to be the best in the world at something. If you’ve been putting off any financial admin, from shopping around for a better savings account to rebalancing your investments, you have no excuse but to find the time and get it sorted.

    Read the full article here

  • UK property transactions rise

    New housing development at Dargavel in BishoptonNew housing development at Dargavel in Bishopton

    New housing development at Dargavel in Bishopton (Richard Johnson)

    The number of UK residential transactions in June came in at 91,370, 8% higher than the same month a year ago. This was marginally lower (less than 1%) than May 2024.

    Ryan McGrath, director of second charge mortgages at Pepper Money, said:

    “The latest HMRC data reflects a minor dip in the steady upward trend the housing market has seen so far this year.

    “The general election introduced an element of caution among buyers and sellers, which may have resulted in some opting to press hold on searches in order to see how things panned out. Following Labour’s victory, we’ve already seen Angela Rayner unveil the draft National Planning Policy Framework, aiming for 1.5 million new homes this term, which could significantly reshape market dynamics.

    “We’re also seeing a ‘wait-and-see’ approach from the Bank of England regarding interest rate cuts, spurring some potential home movers to hold out for more clarity on lower rates. Rather than relocating, we may see more homeowners opting to improve their current homes, creating a growth environment for the second charge mortgage market.”

  • Oil prices rebound

    Oil prices have rebounded 2.5% after Iran promised to avenge the political leader of Hamas who was allegedly killed by Israel.

    Brent crude oil futures prices rose by nearly $2 or 2.5% to reach $80.57, while the North American benchmark, West Texas Intermediate, gained $2.10 or 2.8% to hit $76.83.

    The Guardian has the details…

    Ismail Haniyeh was killed by a strike in Tehran, Iran’s capital. Iran blamed Israel and said it was its duty to avenge the killing. Israel has not commented, although it has previously vowed to destroy Hamas in response to its murder of 1,139 people on 7 October. Israel responded by waging war on Hamas in Gaza, killing an estimated 39,000 people, most of them civilians.

    The latest attack has put investors on alert over a possible escalation in the crisis in the Middle East, which could eventually affect oil supplies.

    Iran is a major supplier of oil, but its products are embargoed by , while Israel is not a major oil producer. Nevertheless, a conflagration in the Middle East would likely result in oil prices soaring.

    However, some analysts have questioned if today’s price jump will last, after weeks of falling prices.

    Gaurav Sharma, an independent oil analyst in London, told Reuters:

    “Overnight developments and elevated geopolitical risk merely provide temporary reprieve for oil benchmarks. Unless oil and gas infrastructure is hit, the latest spike is unlikely to last.”

  • Federal Reserve expected to hold tight once again

    Wall Street is set to open higher very shortly as the US Federal Reserve holds its next meeting on interest rates this evening.

    The central bank announces its latest decision at 7pm UK time, but is expected to hold.

    Financial markets expect a cut in September.

    Meanwhile, Meta will report its latest earnings after markets close, while results for Apple and Amazon are due on Thursday.

  • Will the Bank of England cut rates tomorrow?

    File photo dated 29/09/22 of the Bank of England, London. New data released from the Office for National Statistics on Wednesday will reveal how fast prices were rising across the UK last month. It comes after inflation returned to the Bank's 2% target in May, after nearly three years of it being above target largely as a result of soaring food and energy prices. Issue date: Wednesday July 17, 2024.File photo dated 29/09/22 of the Bank of England, London. New data released from the Office for National Statistics on Wednesday will reveal how fast prices were rising across the UK last month. It comes after inflation returned to the Bank's 2% target in May, after nearly three years of it being above target largely as a result of soaring food and energy prices. Issue date: Wednesday July 17, 2024.

    Money markets are narrowly betting that the Bank of England (BoE) will cut UK interest rates this Thursday, despite recent data showing sticky services inflation.

    Threadneedle Street is set to make its next decision this Thursday, with odds standing at just over 58% for a 0.25% cut, and a likelihood of a cut by September at around 90%.

    “The August decision is, perhaps, one of the toughest MPC decisions to forecast…in recent memory,” Michael Brown, senior research strategist at Pepperstone, said.

    UK interest rates are currently at 16-year record highs of 5.25% and the move would be the BoE’s first interest rate cut in over four years.

    According to a Reuters poll, the majority of economists expect the monetary policy committee (MPC) to reduce interest rates at their August meeting. The survey, conducted between 18 and 24 July, showed that over 80% of economists (49 out of 60) anticipate the BoE will implement the rate cut.

    Read the full article here

  • Mining companies main FTSE gainers

    London’s benchmark index was 1.4% higher in afternoon trade with mining companies the main gainers — helped in particular by a 2% increase in copper prices.

    Copper has been under pressure in recent weeks due to questions over demand from the giant Chinese economy. However, a softer dollar has helped to push up prices of the metal.

    Antofagasta (ANTO.L) is up more than 3% on the day, Anglo American (AAL.L) has also risen around 3%, and Glencore (GLEN.L) and Rio Tinto (RIO.L) rose more than 2%.

    The red metal is one of the key materials for the energy transition because it is used in electrical wires used in everything from electricity generators to wind turbines and electric cars.

  • Will the ECB cut rates in September?

    The inflation makes a September rate cut from the European Central Bank (ECB) a very close call, according to investment bank ING.

    Peter Vanden Houte, ING’s chief economist for the eurozone, said:

    “Looking at today’s data, we would definitely need better inflation figures in August and September to remain on course. This is still possible, since in both the PMI survey and the European Commission’s business and consumer survey, it appears that businesses’ pricing power has started to weaken, now also in services.

    “The latest data has not given the ECB the certainty it needs to confirm that the inflation battle has been won. That said, survey data still suggests that the downward trend in inflation is likely to continue.”

  • HSBC gives shareholders $4.8bn as profits rise

    File photo dated 01/08/23 of an HSBC bank in Covent Garden, London. the bank has announced HSBC's chief financial officer Georges Elhedery will take over as chief executive in September, and will succeed Noel Quinn in the role after Mr Quinn announced his retirement from the bank in April. Issue date: Wednesday July 17, 2024.File photo dated 01/08/23 of an HSBC bank in Covent Garden, London. the bank has announced HSBC's chief financial officer Georges Elhedery will take over as chief executive in September, and will succeed Noel Quinn in the role after Mr Quinn announced his retirement from the bank in April. Issue date: Wednesday July 17, 2024.

    File photo dated 01/08/23 of an HSBC bank in Covent Garden, London. the bank has announced HSBC’s chief financial officer Georges Elhedery will take over as chief executive in September, and will succeed Noel Quinn in the role after Mr Quinn announced his retirement from the bank in April. Issue date: Wednesday July 17, 2024. (Lucy North, PA Images)

    HSBC (HSBA.L) declared a share buyback program of up to $3bn (£2.33bn) from investors, who will receive $1.8bn (£1.4bn) in fresh dividends as Europe’s largest lender reported a rise in second quarter profit.

    The bank posted pre-tax profit in the six months to June of $21.56bn, down from a $21.66bn average of broker estimates compiled by HSBC, according to Reuters.

    Its second quarter results beat expectations, with profits defying forecasts of a fall by rising 1% to $8.9bn.

    Operating expenses of $16.3bn were 5% higher than in the first half of 2023, driven primarily by higher technology spend and investment, inflationary pressures, and an increase in the performance-related pay accrual.

    Net interest margin decreased to 1.62% from 1.7% on a year ago, reflecting a rise in the funding cost of average interest-bearing liabilities, but was better than the 1.53% consensus forecast.

    The Asia-focused bank said it will pay an interim dividend of 10 cents a share, the second payment of 2024 following 31 cents announced last quarter, bringing the total of fresh dividends to $1.8bn.

    Read the full article here

  • Eurozone inflation rises to 2.6%

    Eurozone inflation rose slightly faster than expected in the year to July. Prices rose to a 2.6% annual rate, according to a flash estimate by Eurostat, the EU’s statistics agency.

    This was up from 2.5% in June and higher than the 2.4% expected by economists, and above the ECB’s 2% target.

    Services inflation fell slightly in July, to an annual rate of 4.0%, compared with 4.1% in June, which might be enough to justify the next interest rate cut when the European Central Bank’s rate-setters meet again in September.

    Franziska Palmas, senior Europe economist at consultancy Capital Economics, said:

    “The small fall in services inflation in July is probably just enough for a September rate cut to remain the base case.

    “But with underlying price pressures still high, the decision will be a close call and will depend on data to be released over the next few weeks, including the August inflation print.

    “While the fall in services inflation means a rate cut in September is still more likely than not, it is not a done deal. And until services inflation falls more significantly the ECB is likely to continue to ease policy only slowly.”

  • Profits at Taylor Wimpey slip

    Taylor Wimpey (TW.L) revealed on Wednesday that its half-year profit fell by over 58% to £187.7m from revenue of £1.517bn, reflecting the ongoing stress in the UK housing market.

    This was due to a drop in completions and a squeeze on prices from high mortgage rates.

    However, the FTSE 100 firm, which is one of the UK’s biggest developers, stood by plans to complete between 9,500 and 10,000 homes this year, at the upper end of its guidance.

    The number of properties sold is low at 4,728, and lower than last year, while the average sale price declined marginally by 1%.

    Jennie Daly, chief executive, pointed to the “high” level of “interest rates and mortgage rates.”

    “Though it is early days for the new government, we welcome their recognition that planning is a major barrier to economic growth, of which housebuilding is a significant component, and we look forward to working constructively with them to deliver much needed new homes across the UK.”

    Shares were 1.7% higher in London at the time of writing.

  • Just Eat sales slip on weak Southern Europe demand

    Just Eat courier holding bike, Como, ItalyJust Eat courier holding bike, Como, Italy

    Just Eat courier holding bike, Como, Italy (Luxio)

    Revenues at Just Eat fell 1% to €2.57bn after a strong performance in Northern Europe was offset by weak sales in Southern Europe, North America and Australia & New Zealand.

    The firm said it had seen an overall 6% decline in the number of active customers on its platform in the first half of the year.

    The decline was “driven by our committed path to profitability in markets with highly competitive pressure and challenging performance in Israel,” the firm said.

    The firm recently announced plans to withdraw operations in France and New Zealand.

    Jitse Groen, chief executive, said:

    “We look very critically at our portfolio. The end of the pandemic has changed the horizon for some of the businesses. We are very focused on reducing our costs further going into the second half.”

  • Yen hits four-month high against dollar

    The yen touched a four-month high against the dollar in early trading on Wednesday. The Japanese currency reached 150 per dollar for the first time in months after the Bank of Japan announced a raise in interest rates and the tapering of its asset-buying program.

    Ricardo Evangelista, senior analyst at ActivTrades, said:

    “The aim is to halve bond purchases over the next 18 months. Immediately after the announcement, there were gains, swiftly followed by a retracing as the measures had been somewhat expected.”

    “Nevertheless, the yen regained momentum at the start of European trading.”

    “The rate hike wasn’t a complete surprise but, being only the second interest rate increase in 17 years, it delivers a clear hawkish message from the central bank.”

    “On the other hand, the quantitative tightening announcement fell short of some expectations.”

    “Against this backdrop, the yen looks set to maintain some of this morning’s gains, but further upside may be capped by the disappointing tightening announcement.”

  • Finance and insurance sees sharp decline in self-employment

    New data from the Office for National Statistics (ONS) (collated by Dolan Accountancy) has revealed that self-employment numbers have fallen in all but three industries in the UK.

    The Finance and Insurance sector has seen the largest decline in the past year with a 24% fall in since March 2023. This was closely followed by the food and accommodation sector which has seen a 22% decline.

    Real estate and manufacturing industries have also witnessed a significant drop in self-employment over the last year. The number of self-employed in the real estate sector has fallen nearly 20% and the manufacturing sector has seen a 15% decline.

    There are approximately 4.3 million self-employed workers in Britain, contributing around £278bn to the economy each year.

    The data showed a 3% decrease in self-employed workers year-on-year. In total, there were 4,250 self-employed workers in March 2024, compared with 4,373 in the same period before.

    Just three out of the 14 industries reported an increase in the number of self-employed since March 2023.

    The agricultural, forestry and fishing industry recorded the highest growth in self-employment, increasing by almost a third (28%) since March last year. This is followed by the public administration & defence sector which has grown 25% in the past year.

    The construction sector has also witnessed a small growth in self-employment, increasing by 5% in the past year. The construction sector continues to have the highest number of self-employed workers than any other sector, reaching a high of 773 in 2024; the highest since pre-pandemic levels.

  • Worst airline in UK for customer service revealed

    File photo dated 20/07/11 of passengers getting on a Wizz Air plane at Luton Airport. Flight prices between the UK and the Middle East could be slashed to a quarter of current levels once Wizz Air receives new aircraft, the airline has claimed. Marion Geoffroy, UK managing director of Wizz Air, predicted Airbus’ A321XLR planes will File photo dated 20/07/11 of passengers getting on a Wizz Air plane at Luton Airport. Flight prices between the UK and the Middle East could be slashed to a quarter of current levels once Wizz Air receives new aircraft, the airline has claimed. Marion Geoffroy, UK managing director of Wizz Air, predicted Airbus’ A321XLR planes will

    File photo dated 20/07/11 of passengers getting on a Wizz Air plane at Luton Airport. Flight prices between the UK and the Middle East could be slashed to a quarter of current levels once Wizz Air receives new aircraft, the airline has claimed. Marion Geoffroy, UK managing director of Wizz Air, predicted Airbus’ A321XLR planes will (Steve Parsons, PA Images)

    Wizz Air (WIZZ.L) has been named the worst airline in the UK for customer service, ranking below Ryanair (RYA.IR), a survey by consumer group Which? found.

    Which? surveyed over 4,000 people in May to assess customer service standards across various industries, with airlines scoring poorly overall.

    Wizz Air emerged as the worst performer with a net satisfaction score of +13, far below the industry average of +52. Ryanair and British Airways also fared poorly, with scores of +28 and +46, respectively.

    In the latest findings, 57% of Wizz Air passengers reported encountering problems with customer service, compared to an industry average of 41%.

    Of those who reported an issue in their customer service dealings with Wizz Air, around four in 10 (44%) reported long delays in receiving a response to their email, and the same number (44%) also reported speaking to unhelpful or dismissive advisors.

    Read the full article here

  • AMD surges on earnings beat

    AMD (AMD) reported a small earnings beat and raise driven by AI chip sales, demonstrating that its products are gaining traction in the market. It beat analysts’ expectations on the top and bottom lines and posted better-than-anticipated guidance for the third quarter.

    AMD is currently riding the AI hype train, which is powering sales of its data centre graphics processing units (GPUs) and central processing units (CPUs).

    For the quarter, adjusted earnings per share came in at $0.69 with revenue of $5.8bn. Wall Street was anticipating adjusted EPS of $0.68 on revenue of $5.7bn, according to consensus estimates by Bloomberg.

    Lisa Su, chief executive, said in a statement:

    “Our AI business continued accelerating and we are well positioned to deliver strong revenue growth in the second half of the year led by demand for Instinct, EPYC and Ryzen processors,”

    “The rapid advances in generative AI are driving demand for more compute in every market, creating significant growth opportunities as we deliver leadership AI solutions across our business.”

    The stock is almost 10% higher in pre-market trading.

    Ben Barringer, technology analyst at Quilter Cheviot, said:

    “This is a positive development, especially considering previous concerns about the quality of its offerings. The PC business is showing signs of recovery and are taking market share from Intel.

    “While the gaming and embedded sectors are currently facing headwinds, we think these will turn into tailwinds by 2025. Despite recent weakness, AMD’s stock was up 7% after hours, reflecting growing investor confidence in the company’s prospects.

    “Overall, this performance highlights AMD’s resilience and potential for continued growth, reassuring investors about the company’s strategic direction and market position.”

  • Microsoft stock slumps after results fall short

    Paraguay. 30th July, 2024. In this photo illustration, the Microsoft Corporation logo seen in the background with a silhouette hand holding a smartphone. (Photo by Jaque Silva/SOPA Images/Sipa USA) *** Strictly for editorial news purposes only *** Credit: Sipa US/Alamy Live NewsParaguay. 30th July, 2024. In this photo illustration, the Microsoft Corporation logo seen in the background with a silhouette hand holding a smartphone. (Photo by Jaque Silva/SOPA Images/Sipa USA) *** Strictly for editorial news purposes only *** Credit: Sipa US/Alamy Live News

    Paraguay. 30th July, 2024. In this photo illustration, the Microsoft Corporation logo seen in the background with a silhouette hand holding a smartphone. (Photo by Jaque Silva/SOPA Images/Sipa USA) *** Strictly for editorial news purposes only *** Credit: Sipa US/Alamy Live News (Sipa US, Sipa US)

    Microsoft (MSFT) announced its fiscal fourth quarter earnings after the bell on Tuesday, beating on the top and bottom lines, but missing on cloud revenue expectations.

    The news sent shares of the software giant tumbling on the back of the report.

    For the quarter, Microsoft reported earnings per share (EPS) of $2.95 on revenue of $64.7bn. Wall Street was anticipating EPS of $2.94 on revenue of $64.5bn, according to data compiled by Bloomberg.

    It reported EPS of $2.69 and revenue of $56.2bn during the same period last year.

    Microsoft’s overall cloud revenue came in at $36.8bn, in line with expectations of $36.8bn, but the company’s Intelligent Cloud revenue, which includes its Azure services, fell short, coming in at $28.5bn versus expectations of $28.7bn.

    Shares of Microsoft fell more than 7% in after-market trading but are currently around 2.7% lower this morning.

    While Microsoft’s cloud business missed expectations, overall revenue still rose 21% year over year. Intelligent Cloud revenue, meanwhile, increased 19% year over year.

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