The FTSE 100 was firmly on the front foot as earnings on both sides of the pond fired up investor sentiment and offset any disappointment around the Fed chair’s hawkish tone on interest rates.
London’s leading index was trading 0.3% higher at 9,169 at the time of writing.
“Stellar results from Microsoft and Meta have fired up investors, quickly shifting the focus from US interest rates potentially staying higher for longer, to an environment where big tech is ruling the roost again,” said Russ Mould, investment director at AJ Bell.
“The probability of a US rate cut in September has fallen since the Fed’s rate decision on Wednesday, with the market now pricing in a 57% chance of rates staying level versus 35% a day ago. Normally, such a shift would be negative for investors who typically prefer rates to be trending lower. However, the big tech reporting season has got everyone excited about mega profits and tremendous earnings growth.”
US stocks sank in the close overnight, but futures rebounded sharply as Meta and Microsoft earnings broke after the bell.
In addition to strong earnings releases from US tech, UK investors were treated to a plethora of upbeat results from FTSE 100 stocks.
Rolls-Royce was the FTSE 100’s top riser after raising its profit guidance for the year following a 50% increase in operating profit in the first half.
“Rolls-Royce continues to soar above expectations, delivering yet another set of high-flying results and profit guidance upgrades. The group produces aeroplane engines for larger, long-haul planes. Revenues are being boosted by the upward trend in engine-flying hours, which are now cruising well above pre-pandemic levels,” explained Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
Rentokil Initial shares soared 9% after the pest control group maintained guidance as its US business surprised investors with rare positivity.
“Having fallen from around the 600p level two years ago, they have been trading around the 350p level in recent weeks, so Rentokil Investors could have been forgiven for feeling like the rats were getting the better treatment,” Steve Clayton, head of equity funds, Hargreaves Lansdown said.
“Today’s news that there are signs of improvement in trading at the Group’s key US Pest division was enough to rally spirits, with investors pushing the stock as much as 12% higher.”
Shell was also among the risers on the news that it would commence a fresh $3.5bn share buyback as cash generation remained robust despite lower oil prices.
Mark Crouch, market analyst for eToro, noted that “Shell delivered results that, while down on last year’s bumper profits, comfortably exceeded analyst expectations. In a weaker oil price environment, the group’s performance has been notably resilient, drawing favourable comparison with US peers rather than its more volatile UK counterpart, BP.”
Shell shares were 2% higher at the time of writing.
Amid the furore surrounding Powell’s press conference and US tech earnings releases, Trump announced that refined metals would be exempt from tariffs, sending metals futures sharply lower.
Lower metals prices translated into a weaker session for the miners as copper pure play Antofagasta tumbled 5%. Glencore, Anglo American, and Rio Tinto were all lower by more than 4%.
The FTSE 100 would likely have broken through 9,200 today if the copper tariff hadn’t been announced overnight.