The FTSE 100 recovered slightly from the shock of US Federal Reserve chair Jerome Powell’s comments last Friday, gaining 0.2% to 7,441.9 by lunchtime on Tuesday.
“The FTSE 100 started on the front foot after the Bank Holiday, having careered into the long weekend with some substantial losses after Federal Reserve chair Jerome Powell’s hawkish speech at the Jackson Hole summit,” said AJ Bell
“It helps that US stocks have stabilised to some extent in the interim. Unsurprising given that many expected Powell to pour a dose of cold water on the idea that a so-called ‘dovish pivot’ was on the way.”
Indeed, US futures recovered some ground in pre-open trading, with the Dow Jones gaining 0.7% to 32,305, the S&P 500 rising 0.9% to 4,068 and the NASDAQ climbing 1.2% to 12,644.7.
Pound weakens against Dollar
The FTSE 100 was aided by a weakening in the Pound against the Dollar, as Powell’s hawkish stance spurred an abandonment of stocks, knocking the currency down with the markets shakeup.
“Helping the FTSE 100 is strength in the dollar relative to sterling – will forex traders be eyeing the possibility of parity between the pound and its US counterpart? A similar fate to that which befell the euro recently,” said Mould.
“It would take a big move to get there but as the energy crisis continues to grip the UK it doesn’t feel like a scenario where you could rule anything out.”
“A weak pound is typically good news for a FTSE 100 index which is heavily dominated by overseas earners.”
Europe energy crisis
European markets regained some losses, despite Russian energy firm Gazprom’s approaching shutdown of the Nord Stream 1 pipeline between 31 August and 2 September for apparent maintenance works.
The unscheduled upheaval is set to exacerbate an already critical energy crisis plaguing Europe, as countries across the continent brace for a difficult winter amid Russia’s gas supply deficit.
“Putin’s use of Russian gas supplies as a proxy front in the current conflict with Ukraine continues to add to the supply pressures in the energy market and ramps up the pressure as winter starts to approach,” said Mould.
The German DAX rose 1.7% to 13,123.2, the French CAC gained 1.1% to 6,291.2 and the Italian FTSE MIB increased 1.5% to 22,184.7.
Dechra Pharmaceuticals
Dechra Pharmaceuticals shares soared to the top of the FTSE 100 with a 3.6% climb to 3,566p following its reported acquisition of US veterinary pharmaceutical group Med-Pharmex for £221.5 million.
“I am delighted that we have completed the acquisition of Med-Pharmex, a company that I have been in dialogue with for a number of years,” said Dechra Pharmaceuticals CEO Ian Page.
“The US market is highly consolidated, therefore this is a unique opportunity to add several new products to our portfolio, enter the US FAP market and improve the manufacturing footprint for our North American business.”
Bunzl
Bunzl shares fell 5.9% to 2,931, hitting the bottom of the index after its results disappointed investors.
The company announced a 16.1% revenue growth to £5.6 billion on product cost inflation and acquisitions across the HY1 2022 financial term.
However, despite a raised operating margin outlook, its FY 2022 result is expected to drop slightly against FY 2021.
