The FTSE 100 was the best performer of major European indices on Wednesday with the FTSE’s commodity constituents proving support for the index.
The FTSE 100 was 0.33% higher at 7,477 compared to French CAC trading dead flat and German DAX down 0.14%.
The FTSE’s gains had been more pronounced earlier in the session, but a turnaround in oil prices saw Shell and BP turn negative. Oil traders are weighing up the demand outlook and a possible production increase by OPEC+ which has caused dramatic swing in oil prices this week.
Glencore was the FTSE 100’s top gainer with Anglo American and Antofagasta also rising.
Fed minutes
Investors were eagerly awaiting Federal Reserve minutes on Wednesday. The minutes will provide insight into policy makers’ thoughts on the next move in US interest rates.
Markets had taken a recent miss in US CPI inflation data as catalyst to buy into risk assets. This evening’s minutes have the power to validate, or invalidate, bets on the Federal Reserve slowing their pace of rate hikes.
Should the Fed signal they are planning to push on with 50 – 75bps hikes of the foreseeable future, markets may unwind the recent risk-on trade fairly quickly. This could see selling in both stocks and bonds – and dollar strength.
“Despite the prospect of the Federal Reserve’s latest minutes reminding markets that it has no intention of taking its foot off the acceleration pedal for interest rate hikes, investors in the US, Asia and Europe seem remarkably upbeat ahead of the central bank’s announcement,” said Russ Mould, investment director at AJ Bell.
FTSE 100 reshuffle
Dechra Pharmaceuticals was the FTSE 100’s worst performer as it looked set to be demoted to the FTSE 250 along with Harbour Energy.
In terms of promotion to the FTSE 100, a number of stocks were in the running including abrdn, Weir Group, Digital 9 Infrastructure and Beazley.