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London stocks fell in early trade on Wednesday as investors mulled hawkish Fed comments and eyed the latest reading on the UK construction sector.
At 0905 BST, the FTSE 100 was down 0.3% at 7,594.74.
Overnight, Federal Reserve governor Lael Brainard said the US central bank could start reducing its balance sheet as soon as next month and that it was prepared to take stronger action on raising interest rates. These comments were echoed by San Francisco Fed President Mary Daly.
CMC Markets analyst Michael Hewson said: “Yesterday’s comments put into sharp relief the concerns investors have, that in looking to rein back inflation, the Fed might overplay its hand and tighten too aggressively and tip the economy into recession.”
He added that the Fed minutes later in the day should offer some additional insight into the thinking of all Fed policymakers into this part of the Fed’s normalisation process.
“Today’s minutes should give us an indication as to how much events in Ukraine tempered the Fed’s response last month in terms of the size of the increase in rates, and whether there was a temptation to go harder amongst other members and join Bullard in going for more than 25 basis points,” Hewson said.
On the data front, the S&P Global UK construction PMI for March is due at 0930 BST.
In equity markets, tobacco company Imperial Brands rallied after saying it had made “good progress” in delivering on its strategic objectives in the six months ended 31 March, with the group continuing to perform in line with the five-year strategy launched in 2021. The company said it was on track to deliver full-year results in line with revised guidance issued on 15 March.
Educational publisher Pearson was also a high riser after an upgrade to ‘buy’ at Citi, while IWG was boosted by an upgrade to ‘buy’ at Peel Hunt.
On the downside, Royal Mail lost ground after Barclays cut its price target on the overweight-rated stock. It said current uncertainties and active union negotiations are weighing on the shares and cut its FY23 EBIT estimate by 40% to reflect weaker trading for both UK and GLS.
Housebuilder Redrow was also weaker after saying it had signed the UK government’s pledge to make properties safe following the Grenfell Tower fire and that it expects to make an additional provision of £164m as a result.
Market Movers
FTSE 100 (UKX) 7,594.74 -0.25%
FTSE 250 (MCX) 21,327.97 -0.14%
techMARK (TASX) 4,373.15 -0.29%
FTSE 100 – Risers
Imperial Brands (IMB) 1,656.50p 2.51%
Informa (INF) 618.40p 1.54%
Dechra Pharmaceuticals (DPH) 4,300.00p 1.46%
Pearson (PSON) 774.80p 1.36%
Berkeley Group Holdings (The) (BKG) 3,911.00p 1.19%
Diageo (DGE) 4,024.50p 1.13%
Standard Chartered (STAN) 503.60p 0.80%
Intertek Group (ITRK) 5,326.00p 0.76%
B&M European Value Retail S.A. (DI) (BME) 565.80p 0.75%
Persimmon (PSN) 2,228.00p 0.72%
FTSE 100 – Fallers
Royal Mail (RMG) 320.60p -3.58%
Airtel Africa (AAF) 134.80p -2.53%
Scottish Mortgage Inv Trust (SMT) 1,012.50p -1.89%
Next (NXT) 6,042.00p -1.82%
Rolls-Royce Holdings (RR.) 96.92p -1.76%
Hikma Pharmaceuticals (HIK) 2,030.00p -1.69%
Burberry Group (BRBY) 1,649.00p -1.55%
Associated British Foods (ABF) 1,617.50p -1.55%
Sainsbury (J) (SBRY) 242.80p -1.54%
Intermediate Capital Group (ICP) 1,781.00p -1.36%
FTSE 250 – Risers
Premier Foods (PFD) 125.60p 6.98%
IWG (IWG) 282.00p 5.42%
Provident Financial (PFG) 307.40p 4.77%
BH Macro Ltd. GBP Shares (BHMG) 4,250.00p 2.66%
National Express Group (NEX) 240.00p 2.13%
Syncona Limited NPV (SYNC) 169.80p 1.92%
Plus500 Ltd (DI) (PLUS) 1,447.00p 1.83%
Homeserve (HSV) 890.00p 1.77%
Harbour Energy (HBR) 475.90p 1.51%
Capricorn Energy (CNE) 229.80p 1.50%
FTSE 250 – Fallers
Polymetal International (POLY) 318.00p -5.92%
Moonpig Group (MOON) 218.40p -3.70%
Baltic Classifieds Group (BCG) 150.20p -3.10%
Aston Martin Lagonda Global Holdings (AML) 947.60p -2.99%
Ferrexpo (FXPO) 177.70p -2.90%
Redrow (RDW) 513.00p -2.29%
Auction Technology Group (ATG) 1,036.00p -2.26%
888 Holdings (888) 203.00p -2.22%
GCP Infrastructure Investments Ltd (GCP) 110.00p -2.14%
TUI AG Reg Shs (DI) (TUI) 237.20p -2.02%
