Wall Street muted at open while FTSE 100 cuts morning gains
Wall Street’s main indexes were muted today as focus shifted to this week’s Fed meeting where the central bank is expected to maintain its accommodative stance on monetary policy.
The Dow Jones Industrial Average was down 0.3 per cent, while the S&P 500 fell 0.1 per cent at the open, remaining near an all-time time.
Meanwhile, the tech-heavy Nasdaq was up 0.2 per cent as tech stocks continued to trade slightly higher.
Recent data has indicated that the US economy is regaining momentum but not overheating, which has tamed inflation concerns.
“The market is looking for the Fed to not be dramatically alarmed about fears of inflation, or move too soon with tapering,” said Thomas Hayes, chairman of Great Hill Capital in New York.
“We’re kind of in this ‘Goldilocks’ situation where numbers keep coming in pretty good, liquidity is ample, the Fed is accommodative, and unless those things change, we shouldn’t expect a big change in the stock market.”
London’s FTSE 100 shot up this morning to hit its highest level since February 2020, but gains tailed off as the afternoon progressed.
The blue-chip index was up 0.1 per cent during afternoon trading, buoyed by gains in heavyweight financials and energy stocks.
Oil major BP and Royal Dutch Shell gained 0.7 per cent and 3.3 per cent respectively, tracking higher crude prices.
The rise came as investors awaited the government’s decision on whether to delay England’s complete reopening from a third national lockdown.
After breaking above 7,000 mark in mid-April, the FTSE 100 has traded in tight range on concerns that a resurgence in Covid cases might delay the economic recovery.
Meanwhile, the mid-cap FTSE 250 advanced by 0.1 per cent as outsourcer Serco jumped four per cent after raising its 2021 profit outlook.
The afternoon’s biggest winner was Royal Dutch Shell, who rose 3.3 per cent, followed by Intermediate Capital Group, up by 2.2 per cent.
Software firm Sage and safety equipment group Halma also rose 1.9 per cent and 1.7 per cent respectively.
Events company Informa was the afternoon’s biggest faller, dropping by 4.4 per cent, followed by Rolls-Royce’s two per cent hit.
Meanwhile, British Airways owner IAG and miner Polymetal both dipped by 3.3 per cent and 3.2 per cent respectively.
Around the world
Global shares held near record highs today as markets basked in the prospect of a broadening economic recovery and anticipation of more dovish monetary policy from the Fed.
The MCSI world equity index, the S&P 500 and the pan-regional Stoxx Europe 600 all closed at record highs on Friday.
Japan’s Nikkei rose 0.7 per cent, while MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.2 per cent.
Elsewhere, activity was limited, with the region’s largest markets – China, Hong Kong and Australia, all closed for a holiday.
The latest market rally came even as last week’s US inflation data exceeded expectations, with investors confident that it was a temporary surge.
“Strip used cars, hotels, and other leisure-related reopening plays out of the CPI, and I am not sure the inflation outlook is the end of days many are predicting,” said OANDA analyst Jeffrey Halley.