The FTSE 100 edged higher on Tuesday as markets await central bank decisions later this week and insight into the trajectory of rates for the rest of this year.
The FTSE 100 was up 12 points to 7,665 at the time of writing and had been in a tight range for most of the session.
“Sentiment is subdued as the Fed begins the crunch two-day meeting and investors await the decision on interest rates and clues about how long they will stay elevated,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“The battle against inflation still hasn’t been won, and there will be fresh skirmishes ahead especially if recent disinflationary forces ease off, which means higher rates to are likely to settle in for the long haul particularly in Europe and the UK.”
The Bank of England will announce their rate decision on Thursday.
Rising oil prices will be a concern for market participants hoping for lower rates as higher energy prices threaten to keep inflation rates elevated in the coming months.
Brent oil was trading at $95.24 Tuesday afternoon and looked set to attack the $100 mark in the coming sessions.
UK retail
After a relatively robust summer, the UK consumer picture was starting to cloud over with a raft of dismal updates from Uk retail companies including Kingfisher – the FTSE 100’s top faller on Tuesday.
“Further cracks are appearing in the corporate world. Gloomy Tuesday saw multiple UK companies issue profit warnings, led by Kingfisher which downgraded its earnings forecasts after a poor show from its Polish operations and a lacklustre turn in France,” said Russ Mould, investment director at AJ Bell.
“Fashion retailer Quiz has been having a terrible time, with management blaming inflation for dampening consumer confidence and demand for its products, prompting a near-40% sell-off in its shares.
“Doors and windows group Safestyle says its market slumped in August and September versus last year, and news that it is gaining market share wasn’t enough to prevent a 41% decline in its share price.
“Northcoders, a specialist in training for software coding, saw its share price crash 38% after implying that clients are much more reluctant to commit to training due to budget constraints, job cuts and recruitment freezes.
“Even alcohol seller Naked Wines couldn’t escape the doom and gloom, saying that its new financial year had started off slower than expected, causing its shares to crash 10%.
“These profit warnings suggest investors need to be on their guard for the next earnings season.”
There was a glimmer of hope from Ocado Retail who managed to increase sales despite the cost of living crisis. Ocado shares were 2% higher in mid-afternoon trade.
Hargreaves Lansdown was the FTSE 100’s top gainer, up 6%, after profit before tax jumped 50%, largely due to higher interest rates.