London close: Stocks higher as investors digest Powell speech

London markets closed in positive territory on Friday, as investors digested remarks from US Federal Reserve chairman Jerome Powell at the annual Jackson Hole economic symposium.

The FTSE 100 rose 0.48% to 8,327.78, while the more domestically-focussed FTSE 250 gained 0.4% to close at 21,189.48.

In currency markets, sterling was last up 0.17% on the dollar to trade at $1.3113, while it rose 0.21% against the euro to change hands at €1.1805.

"US equity indices finish the week on a high, with the S&P 500 having now risen more than 10% from its early August low, as Fed Chair Jerome Powell says that 'the time has come' to cut interest rates," said IG senior technical analyst Axel Rudolph.

"US yields and the greenback slid as investors expect larger Fed rate cuts this year.

US new home sales soaring to an over one-year high and building permits being revised higher also helped the positive mood."

Rudolph added that the drop in the US dollar basket to levels last traded in December 2023 had made commodities cheaper to buy with metals such as gold, silver and copper rallying by between 1% and 2%.

"Worries about a breakdown in ceasefire negotiations between Hamas and Israel, which wants to keep its troops in the Gaza strip, have helped the oil price to rise by around 2% and regain some of this week's losses.

"Still the oil price ends the week in negative territory."

UK power bills to rise again, Powell speech in focus

At the top of the agenda was Federal Reserve chair Jerome Powell, who indicated that the central bank was preparing to lower interest rates, signalling a shift in monetary policy.

In his remarks for the Jackson Hole Economic Symposium, Powell stated, "The time has come for policy to adjust," making it clear that rate cuts were on the horizon.

He emphasised that the Federal Reserve did not intend to further slow down the labour market, highlighting a careful approach to managing economic conditions.

Powell also noted that the specifics of rate reductions would be guided by upcoming data, the evolving economic outlook, and an assessment of potential risks.

On home shores, UK household energy bills were set to increase by £149 in October under a new price cap announced by industry regulator Ofgem.

The adjustment would bring the average annual cost for gas and electricity to £1,717, marking a 10% rise compared to the previous year, or an additional £12.42 per month.

Ofgem attributed the increase to heightened geopolitical tensions and extreme weather events, which have driven up the cost of wholesale electricity.

Although the new rates remained lower than the peak prices seen in winter 2023, they would still affect 27 million homes across England, Wales, and Scotland.

The financial burden was expected to be more challenging as certain government support measures, such as winter fuel payments for 10 million pensioners in England and Wales, had been discontinued.

Looking ahead, analysts anticipated further price hikes in January, raising concerns about the ongoing affordability of energy for UK households.

Direct Line falls on Solvency II miscalculation, JD Sports rises again

On London’s equity markets, Direct Line shares dropped after the company revealed a miscalculation in its 2023 Solvency II own funds.

The insurer reported that its solvency capital ratio at the end of 2023 was 188%, down from a previously reported 197%, though it remained above the company’s risk appetite range of 140% to 180%.

Melrose Industries also saw a notable decline following a downgrade from UBS, which shifted its rating from ‘buy’ to ‘sell’.

Meanwhile, recruiter Hays faced pressure after reporting full-year earnings on Thursday, where it highlighted a "clear slowdown" in challenging markets.

On the positive side, Evoke, formerly known as 888, saw its shares rise after announcing the acquisition of New Gambling Solutions (NGS), the operator behind Winner.ro, a prominent online betting and gaming platform in Romania.

JD Sports Fashion continued its upward trend for the second consecutive day, buoyed by a return to like-for-like growth in its second quarter.

The company's store expansion in North America and Europe provided a boost, despite a subdued UK market.

JD Sports maintained its full-year profit guidance but expressed caution regarding its outlook.

Ithaca Energy rebounded from previous session losses, recovering after reporting a decrease in production in its half-year results but still achieving adjusted EBITDAX of $533m, down from $979.7m the previous year.

Bank of Georgia continued its positive momentum, driven by the announcement of a £21m share buyback programme earlier in the week.

Hiscox gained attention after appointing Colin Keogh as interim chair following the death of Jonathan Bloomer earlier in the week.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,327.78 0.48%
FTSE 250 (MCX) 21,189.48 0.40%
techMARK (TASX) 4,860.16 -0.01%

FTSE 100 - Risers

JD Sports Fashion (JD.) 149.25p 5.22%
B&M European Value Retail S.A. (DI) (BME) 452.50p 3.08%
Antofagasta (ANTO) 1,878.00p 2.68%
Airtel Africa (AAF) 115.40p 2.49%
Ashtead Group (AHT) 5,308.00p 2.43%
Schroders (SDR) 349.20p 2.40%
Barclays (BARC) 230.45p 2.24%
Croda International (CRDA) 4,037.00p 2.10%
Intermediate Capital Group (ICG) 2,172.00p 1.97%
Kingfisher (KGF) 287.50p 1.95%

FTSE 100 - Fallers

Melrose Industries (MRO) 474.70p -7.10%
Sage Group (SGE) 996.20p -2.00%
Relx plc (REL) 3,499.00p -0.60%
Admiral Group (ADM) 2,934.00p -0.58%
Rentokil Initial (RTO) 483.60p -0.49%
Rio Tinto (RIO) 4,761.50p -0.47%
Darktrace (DARK) 579.60p -0.41%
Compass Group (CPG) 2,372.00p -0.38%
BAE Systems (BA.) 1,312.50p -0.34%
British American Tobacco (BATS) 2,757.00p -0.33%

FTSE 250 - Risers

Hammerson (HMSO) 28.98p 3.43%
Investec (INVP) 572.00p 3.16%
Ithaca Energy (ITH) 127.60p 3.07%
Supermarket Income Reit (SUPR) 76.00p 2.70%
Carnival (CCL) 1,110.50p 2.68%
Howden Joinery Group (HWDN) 942.50p 2.61%
Ibstock (IBST) 187.00p 2.52%
Watches of Switzerland Group (WOSG) 413.80p 2.32%
JTC (JTC) 1,072.00p 2.29%
Volution Group (FAN) 542.00p 2.26%

FTSE 250 - Fallers

Renishaw (RSW) 3,520.00p -3.03%
Hays (HAS) 95.25p -2.21%
Direct Line Insurance Group (DLG) 185.20p -2.01%
BH Macro Ltd. GBP Shares (BHMG) 363.00p -1.89%
HarbourVest Global Private Equity Limited A Shs (HVPE) 2,585.00p -1.71%
AJ Bell (AJB) 442.50p -1.67%
Moonpig Group (MOON) 215.50p -1.37%
Baltic Classifieds Group (BCG) 258.00p -1.34%
Bakkavor Group (BAKK) 153.00p -1.29%
Network International Holdings (NETW) 385.00p -1.23%