Markets remained relatively calm on Thursday morning despite the Federal Reserve saying that the first interest rate rise could come in 2023.
The FTSE 100 is up by 0.52%, or 37 points, to 7,147.68, as investors digest the Fed’s hawkish outlook.
Across the eurozone, Frankfurt’s DAX 30 index fell 0.2% and the Paris CAC 40 was down by 0.3% in response to the Fed’s curveball.
“The US Federal Reserve has proved a bit of an unreliable partner to the markets, promising not to raise rates too far or too fast and then suddenly announcing an acceleration in its plans on this front,” says AJ Bell financial analyst Danni Hewson.
“For now investors seem to largely be taking these developments in their stride – perhaps reassured by Fed chair Jay Powell’s comments that the guidance for two interest rate hikes in 2023 should be taken with a ‘grain of salt’.
“After all, we’re still talking about something which might happen in two years’ time and plenty could change in the interim, plus the reason rate rises are moving up the agenda is an improving economic outlook, so there is positive news here too.”
“However, it is a reminder that investors will eventually have to confront the reality that the current ultra-loose monetary policy won’t last forever and there were signs of volatility in the bond market off the back of the Fed’s announcement with the dollar also rising to multi-month highs,” Hewson said.
FTSE 100 Top Movers
IAG (3.35%), Standard Chartered (2.93%) and Rolls-Royce (2.75%) are leading the way during the Thursday morning session.
While Halma (-4.98%), 3i Group (-3.88%) and Hikma Pharmaceuticals (-3.62%) have shed the most on the FTSE 100 so far today.
Whitbread
Whitbread (LON:WTB), owner of Premier Inn, confirmed on Thursday that there are strong levels of demand at its destinations across the UK as Brits seek domestic holidays.
Whitbread, which also owns a number of restaurant companies, struggled throughout 2020 as its sites closed down, but confirmed its outlook is now positive, as restrictions across the country have eased, including hotels reopening. Hotel sales in the UK were at 73% of their level from before the pandemic as domestic tourism surged post-lockdown.
Halfords
Halfords (LON:HFD) cycling sales continued to soar during lockdowns, in addition to its car services, the company said on Thursday as it revealed its results.
Having been considered as an essential shop, Halfords stayed open during the lockdowns. Its revenue for the year ending in April came to £1.04bn, up by 9.4% compared to the year before.