London midday: FTSE gains amid Powell relief

Sharecast - The FTSE 100 was up 0.7% at 7,922.99.

Powell said on Tuesday that he was expecting to see "significant" declines in inflation this year, but also acknowledged that interest rates may need to rise further amid job market strength.

Russ Mould, investment director at AJ Bell, said: "Overnight the Federal Reserve chair Jerome Powell had just the soothing message the market was looking for.

"Concerns that last Friday’s bumper jobs report would see the Fed react to what it perceived as an overheating labour market were eased, with Powell’s relatively relaxed response possibly reflecting the seasonal anomalies which often affect the January numbers.

"Whether Powell will remain so relaxed if the next set of payroll figures are similarly elevated is open to question and investors will be keeping a close eye on next week’s US inflation figures for January. If there is any sign of a renewed uptick in prices, then the market would likely respond very negatively.

"For now, the positive sentiment has allowed the FTSE 100 to reach new sunny uplands, hitting a fresh all-time high. Now the milestone has been achieved though there may be a bit of an inquest into why it has taken the FTSE 100 so long when many of its global counterparts were making records years ago."

On home shores, the National Institute of Economic and Social Research forecast that the UK will narrowly avoid recession, but warned it would still feel like one for millions as the cost-of-living crisis continues to bite.

Publishing its latest UK economic outlook, NIESR said it expected the economy to avoid a technical recession in 2023, with GDP growth instead remaining largely flat throughout the year.

It forecast GDP of just 0.2% for 2023, down from an earlier forecast for 0.7%, and 1% in 2024, down from 1.7% A recession is defined by two consecutive quarters of negative growth. However, it also warned that for "at least" 7m households, it would still feel like a recession.

In equity markets, Frasers Group jumped to the top of the FTSE 100 after saying said it was no longer going ahead with its acquisition of the Rascal Clothing brand from JD Sports and confirming completion of the purchase of five of the remaining seven premium fashion brands - Cricket, Tessuti, Scotts, Giulio and Choice. JD Sports also gained.

BP (LON:BP) rose for the second day in a row after posting record profits on Tuesday. The stock was boosted after Barclays (LON:BARC) hiked its price target on the shares to 1,000p from 700p.

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Housebuilder Barratt Developments (LON:BDEV) advanced as it reported a jump in profits but cut its dividend, as the housing market started to cool down in response to rising interest rates and mortgage costs. The company reduced the interim dividend by 9% to 10.2p a share as it posted pre-tax profits of £501.5m, up 15.9%, with revenue up 24% to £2.8bn.

Elsewhere, transport operator FirstGroup gained after saying it had agreed to buy buy Essex-based bus group Ensignbus for an undisclosed sum.

On the downside, corrugated packaging company Smurfit Kappa fell even as it reported a rise in full-year profit and revenue and lifted its final dividend, as it said that inflation had moderated in the latter part of the year. Peers DS Smith and Mondi (LON:MNDI) also lost ground.

Imperial Leather maker PZ Cussons (LON:PZC) and media publisher Future were in the red after interim results and a trading statement, respectively.

Market Movers

FTSE 100 (UKX) 7,922.99 0.74%

FTSE 250 (MCX) 20,429.83 1.19%

techMARK (TASX) 4,567.95 1.16%

FTSE 100 - Risers

Frasers Group (FRAS) 807.50p 2.87%

BT Group (LON:BT.A) 137.55p 2.84%

Next (NXT) 6,894.00p 2.50%

Persimmon (LON:PSN) 1,501.00p 2.49%

Halma (HLMA) 2,323.00p 2.29%

Rightmove (RMV) 602.20p 2.10%

Unite Group (LON:UTG) 1,034.00p 2.07%

Barratt Developments (BDEV) 469.10p 1.96%

JD Sports Fashion (JD.) 182.95p 1.95%

BP (BP.) 526.40p 1.94%

FTSE 100 - Fallers

Haleon (HLN) 329.65p -1.10%

Smurfit Kappa Group (CDI) (SKG) 3,454.00p -0.97%

Smith (DS) (SMDS) 361.50p -0.88%

Pearson (LON:PSON) 897.80p -0.47%

Fresnillo (LON:FRES) 827.60p -0.22%

Shell (LON:RDSa) (SHEL) 2,451.50p -0.14%

Mondi (MNDI) 1,554.00p -0.13%

Aviva (LON:AV.) 443.30p -0.09%

Reckitt Benckiser Group (RKT) 5,754.00p 0.00%

Tesco (LON:TSCO) 246.70p 0.00%

FTSE 250 - Risers

Harbour Energy (HBR) 316.70p 5.92%

Molten Ventures (GROW) 384.40p 5.20%

Just Group (JUST) 84.40p 4.98%

FirstGroup (FGP (LON:FGP)) 114.30p 4.96%

Coats Group (LON:COA) 73.10p 3.69%

Currys (CURY) 75.05p 3.66%

Liontrust Asset Management (LIO) 1,268.00p 3.59%

Moonpig Group (MOON) 131.00p 3.23%

Darktrace (LON:DARK) 251.50p 3.20%

Tate & Lyle (TATE) 803.60p 3.16%

FTSE 250 - Fallers

PZ Cussons (PZC) 197.00p -7.94%

Future (FUTR (LON:FUTR)) 1,542.00p -3.81%

Auction Technology Group (ATG) 723.00p -3.34%

Ferrexpo (LON:FXPO) 134.10p -2.47%

Syncona Limited NPV (SYNC) 170.00p -1.96%

BBGI Global Infrastructure S.A. NPV (DI) (BBGI) 154.40p -1.40%

National Express Group (LON:NEX) 134.20p -1.40%

TP Icap Group (TCAP) 175.00p -1.24%

Bodycote (BOY) 647.00p -1.15%

Fidelity China Special Situations (LON:FCSS) 283.50p -0.87%

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