(Alliance News) - The FTSE 100 closed firmer on Wednesday, in a mixed day for UK stocks, ahead of the Federal Reserve's interest rate call and a wave of US tech earnings.
The FTSE 100 index ended up 23.94 points, 0.3%, at 8,557.81. The FTSE 250 ended down 28.81 points, 0.1%, at 20,559.70, and the AIM All-Share eased 3.13 points, 0.4%, at 712.19.
The Cboe UK 100 ended up 0.2% at 857.74 on Wednesday, the Cboe UK 250 fell 0.1% at 17,986.00, and the Cboe Small Companies fell 0.1% to 16,018.67.
In European equities on Wednesday, the CAC 40 in Paris ended down 0.3%, while the DAX 40 in Frankfurt advanced 1.0%.
A 5.0% drop in LVMH weighed on Paris after earnings fell short of expectations. Gucci owner Kering dipped 5.9%.
In New York, stocks were lower at the time of the London close. The Dow Jones Industrial Average was down 0.1%, the S&P 500 was 0.4% lower, while the Nasdaq Composite declined 0.8%.
The Federal Reserve announces its interest rate decision at 1900 GMT. A press conference with Fed Chair Jerome Powell follows at 1930 GMT.
The federal fund's rate is expected to remain unchanged at a range of 4.25%-4.50%.
JPMorgan's Michael Feroli pointed out various Fed communications over the past month have indicated policymakers' desire to step away from rate cuts and take a pause at the meeting.
"We and the markets also look for no action," he said.
He expects the Fed to resume cuts in May and cut by 125 basis points this year – substantially more dovish than market pricing.
As for Wednesday, Feroli expects it to be a "non-event of a meeting."
But Chris Beauchamp at online trading platform IG said while the rate decision is all but guaranteed the press conference could prove more interesting, "if only to watch Jerome Powell don his diplomatic garb once again and avoid being drawn on how the new administration’s possible tariffs will affect Fed policy."
"President Trump has already made it clear that he expects rates to come down, and Powell will likely have to field a number of questions on this topic," he explained.
Ahead of the Fed's decision, the Bank of Canada lowered interested rates by 25 basis points.
The quarter point cut, which was expected by the market, takes the overnight rate to 3.00% from 3.25%. At its last two meetings, the BoC had preferred a larger half point cut.
After the US market close, earnings are due from Facebook owner Meta Platforms, Elon Musk's Tesla and software firm Microsoft.
"Tonight is a huge night for the tech world as tech stalwarts Meta, Microsoft, and Tesla report earnings after the bell. Making this night even bigger was the DeepSeek LLM AI model heard around the world over the last few days which will put even more of a spotlight focus on Zuckerberg and Nadella's cap-ex comments tonight," analysts at Wedbush remarked.
Chip maker Nvidia headed south once more, after some respite on Tuesday. The stock was trading 4.9% lower at the time of the London close.
The pound was quoted at USD1.2435 late Wednesday afternoon in London, up slightly from USD1.2432 at the equities close on Tuesday.
The euro stood lower at USD1.0419, against USD1.0424. Against the yen, the dollar was trading lower at JPY155.08 compared to JPY155.63.
In the UK, Chancellor Rachel Reeves stressed her determination to "grow the supply side of our economy", outlining a three-pillar approach built on stability, reform and investment.
"Growth will not come without a fight, without a government willing to take the right decisions now to change our country’s future for the better," she said.
Reeves confirmed plans to make Oxford and Cambridge "Europe's Silicon Valley", and a third runway at Heathrow airport.
Plans for the latter gave British Airways owner, IAG, a lift, rising 2.5%.
Bank of England Governor Andrew Bailey told MPs on the Treasury Committee on financial stability that he was "very supportive of the work of the government".
"It is important that we raise the growth rate of the economy, It’s important for all sorts of reasons including financial stability," he remarked.
In London, water utilities overcame earlier share price weakness to trade higher. United Utilities added 2.0%, while Pennon rose 9.4%.
United Utilities said it has accepted the final determination of price controls set out by water industry regulator Ofwat in December.
"With the final determination agreed, we are now able to progress what will be the largest investment in water and wastewater infrastructure in over 100 years, to build a stronger, greener and healthier North West. This historic GBP13 billion investment will support 30,000 jobs across the North West, bringing focused investment in skills and opportunities, supporting economic growth in our region," said Chief Executive Officer Louise Beardmore.
The investment will be funded by the rise in bills, United Utilities noted. The company also will continue to upgrade its dividend in line with the rises in the consumer prices index, including owner occupiers' housing costs.
Pennon launched a GBP490 million equity raise to support the investment required by Ofwat's five-year plan.
Pennon said the funds would go towards "increased investment in the water businesses", and proposed a rights issue of 185.9 million new shares at 264 pence each, on the basis of 13 new shares for every 20 existing shares.
Pennon also revised its dividend policy on the back of Oftwat's plan, rebasing last year's GBP129.3 million total dividend "on a dividend per share basis". The rebased payout will then also grow by the CPIH rate of inflation in the UK.
Dowlais shot up 7.5%. It backed a tie-up with American Axle & Manufacturing, a producer of driveline products and systems, ending its brief stint on the London market as a stand-alone company.
"The combination will bring together two companies with highly complementary customer bases, geographic footprints, powertrain-agnostic product portfolios, and manufacturing operations," Detroit, Michigan-based AAM commented.
Shareholders in London-based automotive engineering firm Dowlais stand to receive 0.0863 of a new AAM share, as well as 42 pence in cash and up to 2.8p in the form of a Dowlais final dividend.
The terms of the deal imply an 85.2p value per Dowlais share, based on AAM's closing price of USD5.82 on Tuesday. The offer price is a 25% premium to the Dowlais Tuesday closing price.
The deal gives the firm a GBP1.16 billion value on a fully diluted basis. Dowlais will hold 49% of the enlarged group.
Dowlais was spun out of Melrose Industries in April 2023. Dowlais includes the GKN Automotive and the GKN Powder Metallurgy businesses.
Brent oil traded at USD77.21 a barrel at the time of the equities close in London on Wednesday, unchanged from Tuesday. Gold eased to USD2,752.18 an ounce against USD2,755.79.
Thursday's global economic calendar sees the eurozone interest rate decision at 1315 GMT, plus quarterly US GDP data and weekly initial jobless claims at 1330 GMT.
Thursday's local corporate calendar has full-year results from oil major Shell, and trading statements from telecoms firm BT, mining group Glencore and accountancy software provider, Sage.
By Jeremy Cutler, Alliance News reporter
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