UK stocks rise as investors eagerly await US Fed policy decision

Investors have speculated that the US Federal Reserve will raise interest rates for the first time in three years – Photo: Shutterstock

UK stocks rose as the FTSE 100 index was boosted by mining and financial stocks, as investors eagerly awaited the much-awaited policy decision from the US Federal Reserve, due later in the day.

European stocks reflected the same upbeat sentiment, with the EURO STOXX 50 index rising as investors speculated that the US Federal Reserve would hike interest rates for the first time since about three years.

Overnight in Asia, Hong Kong’s Hang Seng Index rose, along with the US S&P 500 Index.

What’s interesting today: IG Group said it expected annual revenue to slightly beat market expectations, but warned of slowing growth at its US subsidiary. The Hyve Group has become the latest to announce that it will exit Russia altogether or fundamentally review its operations there.

Why are stocks up today?

US policy decision: Investors were eagerly awaiting the US Federal Reserve’s policy meeting scheduled for later in the day.

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  • What it means: The US Federal Reserve is expected to raise interest rates for the first time in three years, which would go a long way to helping inflation which has hit multi-year highs in recent years. Investors are also eagerly awaiting increased indications of monetary policy tightening, which would be particularly relevant amid the turmoil and uncertainty that the Russian-Ukrainian invasion has recently inflicted on global markets and economies.

Stock markets: highlights

  • The FTSE 100 index edged up 1.24% to 7,264.8 points
  • The EURO STOXX 50 index rose by 2.15% to 3,818.5 points
  • Germany’s DAX index edged up 2.09% to 14,208.3 points
  • The French CAC 40 index rose 2.11% to 6,489.3 points
  • The main sectors were consumer services and financials, while mining and consumer non-durables were affected
  • The US S&P 500 index edged up 0.78% to $4,287.0.

Market sentiment

  • The Cboe Volatility Index, or VIX, a measure of expected swings in US stocks, fell to 28.83
  • The US dollar index fell slightly to $98.73
  • The US 10-year bond yield index traded at 2.149%.

Main buyers: United Kingdom and Europe

  • The main UK equity gainers were Pearson (PSON), London Stock Exchange Group (LSE) and M&G (MNG)
  • Pearson stock rebounded around 20% as investors hoped for a private equity bid
  • Shares of the London Stock Exchange Group gained following the company’s announcement of its foray into global private markets
  • M&G shares rose slightly after the company recently appointed a new chairman of the board
  • The best performing companies in Europe were Adyen BV Parts Sociales, Mercedes-Benz Group and Ahold Delhaize (AD)
  • Shares of Adyen BV Parts Sociales gained after the company was recently given an “outperforming” rating by Credit Suisse
  • Mercedes-Benz Group shares rallied after the recent launch of a new battery factory
  • Ahold Delhaize shares edged higher after the company recently launched its annual start-up program.

Main losers in equities: UK and Europe

  • The worst performing companies in the UK were Polymetal International (POLY), ITV (ITV) and Burberry (BRBY)
  • Polymetal International shares have fallen following the recent loss of six of its board members
  • Shares of Burberry (BRBY) fell following the company’s exit from Russia
  • The main equity losers in Europe were SAP (SAPd), Danone (BN) and Munich Re (MUV2)
  • SAP shares tumble after Ukrainian President Zelensky pressured software makers to be tougher on Russia
  • Danone recently launched a new strategic plan
  • Munich Re recently announced a new partnership with Netradyne.

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