Wednesday 29 July 2020 4:24 pm

Markets live: FTSE 100 rises as investors eye Fed decision

The FTSE 100 hung on to gains and US stocks rose as investors eyed potential stimulus from the US Congress and Federal Reserve and a torrent of earnings reports delivered mixed results.

London’s blue-chip index rose 0.1 per cent to 6,135 points. The FTSE 250 of smaller firms fell 0.1 per cent, however.

Read more: Boris Johnson warns of second coronavirus wave in Europe

On Wall Street, the S&P 500 was 0.8 per cent higher in morning trading. The Dow Jones was up 0.2 per cent and the Nasdaq had risen 1.1 per cent.

The FTSE 100 spent much of the day in the green despite poor results from Barclays, housebuilder Taylor Wimpey and medical manufacturer Smith & Nephew.

It clung to its gains as it approached the close ahead of the Fed decision. The Fed is expected to hold rates but say some gloomy things about the US economy.

In Europe, Germany’s Dax slipped 0.1 per cent and the continent-wide Stoxx 600 also fell 0.1 per cent. France’s CAC jumped 0.7 per cent, however.

FTSE 100 succumbs to weak earnings

Banking giant Barclays put aside a higher-than-expected £1.6bn to cover the loan losses it expects to incur from the coronavirus pandemic. Its shares were down 5.5 per cent.

Barclays’s half-year pre-tax profit more than halved year on year, from £3bn in 2019 to just £1.3bn in the first half of 2020. However, its trading income jumped.

Housebuilder Taylor Wimpey shed 6.7 per cent after saying it would complete around 40 per cent fewer homes in 2020. Smith & Nephew shares slipped 0.8 per cent after worse-than-expected results.

Retailer Next boosted the blue-chip index, however. Its shares jumped 8.5 per cent after a smaller-than-expected fall in sales.

The FTSE 100 had a “decidedly forgettable session,” said Connor Campbell, financial analyst at Spreadex.

“The markets moped about ahead of the month’s Federal Reserve rate vote.” It is expected to leave rates on hold but say some gloomy things about the economy.

Federal Reserve chair Jerome Powell - FTSE 100 flatlines but US stocks rise
FTSE 100 investors expect Fed chair Jerome Powell to keep rates on hold but to suggest the central bank will do all it can to aid an economic recovery (Getty Images)

Read more: UK economy could take four years to recover, says EY

Gold slips after hitting all-time high

Gold fell 0.1 per cent to $1,957 as investors took stock of the recent record-breaking rally.

The yellow metal hit an all-time high yesterday of $1,980 an ounce. It has since cooled off slightly, although analysts say it could well test the $2,000 barrier.

Gold’s rise has been helped by expectations of further stimulus and a falling dollar. It is seen as a hedge against inflation and currency debasement.

Read more: Gold hits record $1,980 high as dollar weakens

The dollar hit a new two-year low today, falling 0.3 per cent on the index.

Ricardo Evangelista, senior analyst at trading platform Activtrades, said the dollar has been hit by “investors’ concerns over the ability of the American economy to bounce back”.

US stocks rise amid some upbeat results

US stocks climbed as earnings season continued, pushed up by a number of better-than-expected results.

Starbucks shares jumped 3.7 per cent on the S&P 500 after it reported positive July sales.

Edward Moya, senior market analyst at currency firm Oanda, said: “This morning’s earnings results from General Electric, Boeing, and General Motors should keep risk appetite steady going into this afternoon’s Fed policy meeting.

Read more: Boeing warns of further job cuts as coronavirus sends planemaker to $2.4bn loss

“The Fed is unlikely to announce any new policy actions,” he said. But it is “expected to remind financial markets that they are ready to do more”.

“The economy is worse off since the last meeting and the Fed should signal they will do more until the uncertainties to the outlook improve.”

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