Rolls Royce was the standout performer on Thursday as the engine maker’s shares jumped over 20% on better than expected 2022 results and a positive outlook.
However, the FTSE 100 fell 0.4% and underperformed European indices as mining companies dragged the index lower following Anglo American’s earnings update.
The German DAX was 0.33% higher and French CAC gained 0.2% at the time of writing.
Declines in Anglo American, Antofagasta, Endeavour Mining and Rio Tinto weighed on the index and wiped out the impact of robust earnings from both WPP and Rolls Royce.
“The FTSE 100 slipped as a positive reaction to results from Rolls-Royce and WPP was not enough to offset weakness from various mining, pharmaceutical and consumer goods stocks,” said Russ Mould, investment director at AJ Bell
“BAE Systems dipped nearly 3% on its full year results. Despite predicting higher military spend in 2023 which should improve its earnings, the negative share price reaction is most likely to down to investors taking profit after a strong run for the shares since Russia invaded Ukraine a year ago and how that led investors to seek exposure to the defence sector.”
Mondi was the FTSE 100 top faller, down 5%, after warning of marcoeconomic uncertainties and said they saw “an environment of softer demand and pricing, with destocking expected to continue through the first quarter.”
US Interest Rates
The market’s perception of interest rate trajectories has dominated equity trade so far this year and last night’s Federal Reserve minutes threw cold water on hopes of a Fed pivot in the short term.
“There were few crumbs of comfort from the closely watched minutes of the US Federal Open Markets Committee, with the determination of policymakers to stay tough on inflation clear,” Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“The data so far might signal that the hot prices are beginning to be tamed, but it is not yet enough reassurance that the spiral is going to come down fast enough to target without more aggressive tightening, albeit at a slower place. The resilience of the US economy is right now considered to be disadvantage, with rate hikes so far proving to be just glancing blows in certain sectors.”
The US economy smashed economist estimates and added 517,000 jobs in January, a significant show of strength that doesn’t warrant easier monetary policy.
The S&P 500 finished last night’s session lower but futures were pointing to a higher open.