London open: Stocks in the black as Fed concerns recede

London stocks edged higher in early trade on Tuesday, taking their cue from a positive session on Wall Street after reassuring comments from New York Federal Reserve Bank President John Williams.

At 0905 BST, the FTSE 100 was up 0.3% at 7,080.98.

Neil Wilson, chief market analyst at Markets.com, said: "John Williams reiterated that the US central bank is not moving quickly, despite what most saw as a hawkish statement last week."

Williams said on Monday: "It’s clear that the economy is improving at a rapid rate, and the medium-term outlook is very good. But the data and conditions have not progressed enough for the FOMC to shift its monetary policy stance of strong support for the economic recovery."

Wilson said: "Meanwhile in prepared remarks ahead of his Congressional testimony today, Fed chair Jay Powell reiterated that the Fed is not unduly concerned that hot inflation readings are here to stay.

"His testimony from 7pm (BST) is likely to be market-moving - particularly if he says anything considered as hawkish. We will want to see whether he seeks to row back on the messaging the market took from last Wednesday."

On home shores, figures released earlier by the Office for National Statistics showed government borrowing was lower than expected in May as the reopening of the economy supported government receipts and the state spent less than forecast.

Public sector net borrowing, excluding public sector banks, was £24.3bn. Borrowing was £19.4bn less than a year earlier and better than the £28.5bn forecast by the Office for Budget Responsibility. Analysts had on average expected borrowing of £25.5bn.

The ONS estimated central government receipts were £56.9bn in May, £7.2bn more than a year earlier as VAT and income tax outstripped forecasts. Central government spent £81.8bn - lower than a year earlier and less than the OBR's £84.9bn forecast as support for businesses and households eased.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Public borrowing is continuing to decline more rapidly than the OBR expected, with the main measure of borrowing in May undershooting its £28.5bn forecast by £4.2bn."

In equity markets, commercial landlords British Land and Land Securities rallied after an upgrade to ‘overweight’ from ‘neutral’ at JPMorgan, which argued that UK retail was turning a corner.

GKN owner Melrose Industries rose as it said it will return around £730m in cash to shareholders after completing the sale of its Nortek Air Management business.

Building materials distributor and DIY retailer Grafton gained after saying it had bought Finland’s family-owned IKH for €199.3m in cash.

National Express was on the rise after it said current trading was slightly ahead of expectations and announced the €13m acquisition of Spanish urban bus operator Transportes Rober.

On the downside, packaging company DS Smith fell as it said the current financial year had started well but reported a sharp drop in annual profit caused mainly by higher costs and lower prices during the pandemic.

Aston Martin also lost ground after saying it is suing Swiss car dealer Nebula Project and its board members for failing to pay some customer deposits for orders of the £2.5m Valkyrie sports car and that this will dent full-year profits by up to £15m.

Market Movers

FTSE 100 (UKX) 7,080.98 0.26%
FTSE 250 (MCX) 22,562.94 0.47%
techMARK (TASX) 4,468.28 0.12%

FTSE 100 - Risers

British Land Company (BLND) 517.80p 4.92%
Land Securities Group (LAND) 708.60p 4.57%
Rolls-Royce Holdings (RR.) 112.34p 2.82%
Melrose Industries (MRO) 162.75p 2.75%
International Consolidated Airlines Group SA (CDI) (IAG) 202.25p 2.25%
Royal Dutch Shell 'B' (RDSB) 1,392.80p 2.23%
Royal Dutch Shell 'A' (RDSA) 1,451.20p 1.91%
BP (BP.) 322.50p 1.78%
Whitbread (WTB) 3,281.00p 1.77%
Informa (INF) 539.80p 1.54%

FTSE 100 - Fallers

Just Eat Takeaway.Com N.V. (CDI) (JET) 6,276.00p -2.68%
United Utilities Group (UU.) 1,010.50p -1.65%
Hargreaves Lansdown (HL.) 1,604.50p -1.62%
Smith (DS) (SMDS) 426.00p -1.48%
AstraZeneca (AZN) 8,313.00p -1.13%
GlaxoSmithKline (GSK) 1,404.20p -0.76%
Severn Trent (SVT) 2,502.00p -0.67%
Kingfisher (KGF) 351.30p -0.65%
Avast (AVST) 489.70p -0.65%
Intermediate Capital Group (ICP) 2,174.00p -0.55%

FTSE 250 - Risers

FDM Group (Holdings) (FDM) 1,046.00p 5.87%
Tullow Oil (TLW) 63.20p 3.44%
Grafton Group Ut (CDI) (GFTU) 1,162.00p 3.29%
Capital & Counties Properties (CAPC) 174.50p 3.07%
easyJet (EZJ) 1,003.00p 3.04%
National Express Group (NEX) 285.80p 2.81%
Carnival (CCL) 1,766.00p 2.51%
Sirius Real Estate Ltd. (SRE) 108.20p 2.46%
Hammerson (HMSO) 40.40p 2.46%
Restaurant Group (RTN) 125.40p 2.45%

FTSE 250 - Fallers

Capita (CPI) 39.89p -2.90%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,276.00p -2.68%
Dr. Martens (DOCS) 403.80p -1.99%
Aston Martin Lagonda Global Holdings (AML) 1,896.00p -1.99%
Essentra (ESNT) 321.50p -1.83%
Baillie Gifford US Growth Trust (USA) 324.50p -1.82%
Babcock International Group (BAB) 293.40p -1.31%
BlackRock Smaller Companies Trust (BRSC) 1,938.00p -1.22%
Bytes Technology Group (BYIT) 452.20p -1.05%
Hochschild Mining (HOC) 159.40p -0.99%