The FTSE 100 missed out on a global equity rally on Wednesday as pharma stocks and other overseas earners weighed on the index amid hopes of a US interest rate cut.
London’s leading index was 0.4% in the red at the time of writing, underperforming the German Dax’s 0.2% gains and a surging 2% rally in the French CAC.
The softer session for the FTSE 100 also ran counter to S&P 500 futures, which pointed to a higher cash open.
The key driver of stocks on Wednesday was the uptick in hopes of US interest rate cuts after a speech by the Federal Chair that signalled rate setters were preparing to lower borrowing costs.
“Markets have been lifted by the rekindling of rate cut expectations in the US after comments from Fed chair Jerome Powell which highlighted sluggish hiring were taken as an indication that not one, but two further cuts were very much on the table for 2025,” says Danni Hewson, AJ Bell head of financial analysis.
“Buoyed by continued deal making in the frothy AI sector, investors seem prepared to overlook the growing number of warnings about the potential for a market correction at the moment, but this earnings season will be crucial if that optimism is to continue.”
This optimism wasn’t evident in London, and the FTSE 100’s lack of tech exposure and inverse relationship with the pound can be blamed for the drop on Wednesday.
Pharma giants AstraZeneca and GSK were down heavily. As the FTSE 100’s largest constituent, Astra’s 2.3% drop weighed on the index, offsetting gains for Burberry and Ashtead.
Burberry enjoyed the positive effects of strong results from LVMH that showed the luxury brand had returned to growth. LVMH shares were 14% higher at the time of writing, helping propel the CAC over 2% higher.
Entain was the FTSE 100’s top faller after the betting firm released a reasonable, but uninspiring, third quarter trading update.
“It was very much a case of ‘steady as she goes’ from Entain this morning,” explained Chris Beauchamp, Chief Market Analyst at IG.
“The group remains on track, but after the surge from April’s low the share price is clearly looking for something more exciting, though it has only been three months since it upgraded guidance for the year. So long as Entain can show more progress at its next update then shareholders will remain content – the longer-term picture in the share price suggests it has turned a corner, after a severe decline from 2021-2024.”
Entain shares were down over 3% at the time of writing.