The FTSE 100 recovered early losses on Wednesday after a terrible session overnight in the US sparked by interest rate concerns following Federal Reserve chair Powell’s hawkish testimony to Congress.
Jay Powell struck a hawkish tone in his delivery and suggested markets should prepare for more 50bps rate hikes, and for rates to remain higher for longer.
“The broad-based rally in stock and bond markets since the October lows rests largely upon their conviction that inflation will retreat, the global economy will suffer no more than a shallow recession (or even avoid a downturn altogether) and central banks will be able to start cutting interest rates sooner rather than later as a result,” said AJ Bell investment director Russ Mould.
“The statement from US Federal Reserve chair Jay Powell to the Senate Banking Committee in Washington on Tuesday challenges this oh-so-cosy consensus and that is why stock markets are stumbling.”
The FTSE 100 was trading at 7,916 at the time of writing, down just 2 points. The index touched lows of 7,891 earlier in the session. The S&P 500 was down around 1.5% overnight in a market reaction to a hawkish Fed chair that was to be expected.
Hiscox
Hiscox was the FTSE 100’s top riser after their gross premiums and premiums written rose in 2022. Poor investment results meant profit before tax fell, but delivery on their strategy ultimately helped shares higher.
“I am very pleased with the progress made across the Group during 2022, as we delivered the strongest underwriting result in seven years. We have a refined strategy, a new experienced and energetic leadership team, we have made significant progress in rolling out new-generation technology in the USA and Europe and we are enjoying our highest employee engagement scores in ten years,” said Aki Hussain, Group Chief Executive Officer, Hiscox.
Hiscox shares were 3.5% higher at the time of writing.
Schroders was the top faller, down 3.4%, after peer Legal & General reported their full year results and provided an insight into the damage Liz Truss’s doomed mini-budget did to their investment business. Legal & General were 2% lower. Schroders reported their results earlier in March.