Gains fade on London’s FTSE 100 as investors absorb hawkish signals on US rates
The UK’s main stock index was lower in afternoon trade as traders across global markets were taking in signs that US policymakers were preparing to intensify their fight against inflation.
Hotly anticipated remarkes from the chairman of the Federal Reserve, Jay Powell, were being interpreted as hawkish, taking the edge of investors’ appetite for risk at the end of a week dominated by anticipation of the Jackson Hole speech and further sharp rises in energy costs.
The FTSE 100 was down 33 points at 7443.0 in afternoon London trade. The decline also came as UK regulators lifted the country’s price cap on consumers’ annual energy costs by 80% from October. That left stocks exposed to constrained consumer spending exposed as the wider sentiment soured after Powell’s remarks. It had been higher for much of the session, trading as high ads 7530.6.
Ocado, the online grocer, fell 2.6% to 744p. Sainsbury lost 2.1% to 204p. JD Sports was down 2% at 112p.
Wall Street’s S&P 500 falls as Fed chairman sounds hawkish on US interest rate hikes
New York stocks fell on Friday after much-anticipated remarks from Jay Powell, the chairman of the Federal Reserve, sounded hawkish on the outlook for rate rises from the central bank.
“Restoring price stability will take some time and requires using our tools forcefully,” he told the annual gathering of central bankers at Jackson Hole, Wyoming. The remarks came at one of the most hotly-anticipated events by traders, who are on watch for insight into the balance of thinking among policymakers on the room they have to fight inflation without holding back the world’s biggest economy too much.
“There will very likely be some softening of labor market conditions. While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” said Powell.
A recent run of strong economic data in the US, especially from the labour market, has looked to give the more aggressive voices on the rate-setting Federal Open Market Committee greater sway.
It has already adopted bigger-than-usual rate hikes of 0.75% and taken its target range for the Fed Funds rate to 2.25% to 2.50% with rises of 2.25% in total this year.
US stocks open lower as investors await Powell speech
Stocks opened lower in the opening minutes of trading on Wall Street as investors held their breath in anticipation of hawkish mood music from Fed chair Jerome Powell as he gives his annual Jackson Hole speech.
The S&P500 opened 0.38 points lower while the Nasdaq dropped 8.69 points.
Electronic Arts opened 4% higher on speculation of a potential takeover by Amazon, while Alibaba grew 0.7% on news US regulators had reached an agreement with China on audit inspection rules.
Moderna to sue Pfizer and BioNTech over coronavirus vaccine patents
Moderna has said it will sue Pfizer and BioNTech over claims the companies used its patented mRNA technology in their coronavirus vaccines.
Moderna chief legal officer Shannon Thyme Klinger said: “We believe that Pfizer and BioNTech unlawfully copied Moderna’s inventions, and they have continued to use them without permission.”
Moderna said it would not be challenging the use of its intellectual property in low and middle income countries, but expected its patents to be respected in other markets.
BioNTech shares fell 1% in early trading in New York.
Amazon won’t be buying EA, CNBC says
Amazon will not be making a bid for Electronic Arts according to news outlet CNBC.
Shares in FIFA Football video game maker EA had jumped 15% in pre-market trading amid speculation that it was going to be acquired by the e-commerce giant.
The company has made a string of acquisitions in a bd to bolster its market share in the digital media space recently, including buying James Bond maker MGM studios in a £6.8 billion deal in March.
US regulators reach audit agreement with China
The US audit regulator says it has reached an agreement with Chinese authorities over inspecting the accounts of firms registered in China and Hong Kong, in the first sign a protracted dispute between the two countries could be cooling.
The Public Company and Accounting Oversight Board said the agreement was the most detailed ever reached with China.
It comes after five US-listed Chinese firms, including China Life Insurance and PetroChina said they would be delisting from the New York Stock Exchange after the US Securities and Exchange Commission said they had not met US auditing requirements.
The Chinese securities regulator has since said the delistings can be avoided if the regulatory needs of the two nations can be met.
Jim Ratcliffe’s Ineos in $330 million swoop for Singapore chemicals firm
UK billionaire Sir Jim Ratcliffe’s company Ineos is buying a fellow chemicals firm in Singapore for $330 million, in a move that takes one of its main businesses into the Asian market.
Ineos Phenol will buy Mitsui Phenols Singapore from Mitsui Chemicals of Japan, adding over one million tonnes of production capacity to the group for compounds used to make materials used to make plastics, synthetic fibres such as nylon and solvents.
Ineos runs a range of autonomous divisions which, as a group, make up one of the top five biggest chemical businesses in the world, generating the revenue for Ratcliffe’s move into sport.
Ineos Phenol describes itself as the biggest maker of phenol and acetone operating in Germany, Belgium and USA.
British Honey Company warns of revenue dip
Honey and spirits maker The British Honey Company today warned of fall in revenues as “substantial” cost of living increases hits customer purchasing power.
It said that end-of-year results were now likely to “fall below” previous market expectations and that the business now expected to deliver revenues of “approximately £6 million”.
The Buckinghamshire firm told investors it was “experiencing more challenging conditions in the second half of the year, exacerbated by substantial domestic cost of living increases and international geo-political instability as the war in Ukraine continues, inflating raw materials costs and adding to supply-chain issues.”
Shares in BHC were suspended from the alternative trading platform Aquis last month after it said it needed additional time to complete the audit of its full year results.
The business is now expected to be accepted back as it seeks to deliver last year’s financial results next month.
News of £5.1bn takeover sees Micro Focus shares skyrocket 90%
Shares in British tech company Micro Focus almost doubled this morning after it agreed a £5.1 billion takeover from Canada’s OpenText.
They were up most than 90% at 512.40p — just under the 532p offer price — in early trading following news of the deal announced late last night.
The Newbury industrial software provider becomes the latest large British company to go under the hammer as the weak pound is attracting suitors.
Blow for Musk as US judge scorns demand for Twitter user data
Elon Musk has suffered a setback in his legal battle with Twitter after his demands that the firm hand over user data was dismissed by a judge as “absurdly broad”.
“No one in their right mind has ever tried to undertake such an effort,” Chancellor Kathaleen McCormick said in a Delaware court.
Musk walked away from his Twitter takeover offer after accusing the company of understating the number of fake accounts on its platform. Twitter has denied this.
Musk’s argument got a boost this week after the US securities regulator wrote to Twitter’s CEO, Parag Agrawal, requesting details on its methodology for estimating the number of fake accounts.