Stocks mixed ahead of Federal Reserve’s interest rate decision

Stock prices in London closed mostly higher on Wednesday, as the US Federal Reserve’s interest rate decision comes closer.

“Risk appetite remained firm heading into a busy 48-hour period for markets, where major central banks decide on interest rates, technology companies will report their quarterly results, and more to the point, (US President Donald) Trump will meet (Chinese premier) Xi Jinping in a meeting expected to last three hours,” said StoneX’s Fawad Razaqzada.

The FTSE 100 index closed up 59.40 points, or 0.6%, at 9,756.14. The FTSE 250 ended down 35.85 points, or 0.2%, at 22,448.27, and the AIM All-Share closed up 2.10 points, or 0.3%, at 772.89.

Next led the FTSE 100, up 8.8%.

The Leicester-based clothing retailer’s full price sales in the 13 weeks to October 25 were up 11% on-year, £76 million ahead of guidance. Next raised its fourth-quarter full price sales growth outlook to 7.0% from 4.5%, adding £36 million to its forecast.

Next also said it intends to return remaining surplus cash at the end of January with a special dividend which, based on the latest guidance, would be around £3.10 per share.

Stocks in New York were higher. The Dow Jones Industrial Average was up 0.6%, the S&P 500 index was 0.3% higher, and the Nasdaq Composite was up 0.5%.

Nvidia was 2.7% higher, after the AI chip juggernaut became the world’s first five trillion dollar (£3.8 trillion) company with its share price rising by 4.9% to 210.90 dollars at the open of trading on Wall Street.

This follows continued strong sales, a flurry of new deals and expectations that the company may soon regain access to China.

Nvidia chief executive Jensen Huang is expected in South Korea this week, where he will attend the sidelines of the Apec summit at which M Trump will meet his Chinese counterpart Mr Xi, with issues related to AI development expected to be discussed.

The yield on the US 10-year Treasury was quoted at 4.00%, widening from 3.98%. The yield on the US 30-year Treasury was quoted at 4.57%, widening from 4.55%.

“Across the Pacific, the Federal Reserve is widely tipped to cut rates (by 25 basis points) again tomorrow,” said Mr Razaqzada. “Should chair Jerome Powell sound more dovish than markets expect, the US dollar index could find itself under renewed downward pressure.”

Earlier on Wednesday, the Bank of Canada cut the overnight rate by 25 basis points to 2.25% from 2.50%. The decision was in line with market expectations.

Attention will also be on Thursday’s meeting between Mr Trump and Mr Xi, where investors hope some progress will be made in the trade talks. Any further delays or scaling back of tariff measures would likely provide a further boost to sentiment.

“However, even if the Trump–Xi summit brings a positive surprise, it may not be enough to offset the dollar’s broader drift lower … Dollar positioning is less one-sided than earlier in the year, which could limit any outsized reaction to dovish rhetoric,” Mr Razaqzada continued.

“Recent soft CPI data has already reduced the chances of a hawkish surprise. That means the USD/JPY could potentially move back below 150.00, especially if the BoJ (Bank of Japan) springs a hawkish surprise or signals a steeper path to normalisation than expected.”

The pound was quoted at 1.3236 dollars at the time of the London equities close on Wednesday, lower compared with 1.3279 dollars on Tuesday. The euro stood flat at 1.1660 dollars. Against the yen, the dollar was trading at 152.10 yen, slightly down compared with 152.14 yen.

In European equities on Wednesday, the CAC 40 in Paris closed down 0.2%, while the DAX 40 in Frankfurt ended down 0.7%.

The European Central Bank (ECB) is expected to enact another interest rate hold in what is likely to be an uneventful decision on Thursday, before focus moves to the final meeting of the year in December.

In a September decision which was widely expected, the ECB left the rate on the deposit facility at 2.00%, on the main refinancing operations at 2.15%, and on the marginal lending facility at 2.40%. It was the second hold in succession. Prior to a hold in July, it had cut for seven meetings in a row.

In Madrid, Banco Santander rose 4.3%. The banking firm’s attributable profit rose 2.1% on-year to 3.50 billion euros in the third quarter, leaving it on track to achieve its 2025 targets. In the UK, UBS said Santander’s profit was around 30% ahead of expectations

Also on Wednesday, Santander urged the UK government to consider changes to the Financial Conduct Authority’s proposed redress scheme for historical car finance commissions.

UK chief Mike Regnier warned that the current plan could have “unintended consequences for the car finance market”, including reduced credit supply and damage to the automotive sector.

Brent oil was quoted at 64.52 dollars a barrel at the time of the London equities close on Wednesday, up from 64.33 dollars late on Tuesday.

Gold was quoted higher at 3,997.24 dollars an ounce against 3,957.04 dollars.

The biggest risers on the FTSE 100 were Next, up 1,175.0p at 14,580.0p, GSK, up 108.0p at 1,752.0p, Glencore, up 19.8p at 371.25p, Fresnillo, up 108.0p at 2,256.0p, and Beazley, up 28.0p at 933.5p.

The biggest fallers on the FTSE 100 were Relx, down 102.0p at 3,396.0p, Sage Group, down 30.5p at 1,144.0p, Rentokil Initial, down 11.0p at 420.6p, Rightmove, down 16.61p at 667.99p, and Compass Group, down 62.0p at 2,536.0p.

On Thursday’s economic calendar, there are several eurozone releases alongside the ECB rate call, including unemployment, gross domestic product, and consumer confidence.

On Thursday’s UK corporate calendar, there are third-quarter results from Shell, Spectris and Standard Chartered.

Trading updates are also scheduled from multiple firms including Coca-Cola HBC, Haleon, WPP and Computacenter.

Contributed by Alliance News