(Alliance News) - The FTSE 100 ebbed and flowed on Tuesday before closing near new all-time highs after as expected comments from Fed Chair Jerome Powell failed to knock markets.
Powell reiterated that the US central bank is in "no hurry" to lower interest rates despite being requested to do so by one Senator.
The FTSE 100 index closed up 9.59 points, 0.1%, at 8,777.39. It had earlier hit a new all-time high of 8,789.58.
The FTSE 250 ended down 66.56 points, 0.3%, at 20,919.72, and the AIM All-Share closed down just 0.06 of a point at 724.54.
The Cboe UK 100 ended up 0.1% at 879.42, the Cboe UK 250 closed down 0.5% at 18,261.46, and the Cboe Small Companies climbed 0.3% at 15,882.77.
In European equities on Tuesday, the CAC 40 in Paris ended up 0.3%, while the DAX 40 in Frankfurt closed 0.6% higher.
Stocks in New York were mixed at the London equities close, with the DJIA up 0.1%, the S&P 500 index little changed, and the Nasdaq Composite down 0.1%.
Wall Street was assessing the fall-out from the White House's latest tariff plans, and the congressional testimony by the US Federal Reserve Chair Jerome Powell.
Responding to Donald Trump's latest moves, Canadian leader Justin Trudeau vowed a "firm and clear" response to the plan for 25% tariffs on steel and aluminium imports, while EU chief Ursula von der Leyen said the bloc would act to "safeguard its economic interests" as it navigates the latest levies.
Meanwhile, Powell repeated the US central bank is in no rush to lower interest rates.
The Federal Reserve chair said in testimony to the Senate Committee on Banking, Housing & Urban Affairs on Tuesday: "With our policy stance now significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance."
The statement comes after the Fed late last month opted to hold the benchmark federal funds target range at 4.25-4.5%.
Analysts don't expect another rate cut until the middle of the year, while some suggest the easing cycle may already be over.
Highlighting the political pressures the Fed are likely to face, Senator Elizabeth Warren urged Powell to make a "meaningful rate cut" next month.
"I urge you to move more rapidly to bring down interest rates, beginning with a meaningful rate cut next month," Warren said.
Speaking before Powell's testimony, Cleveland Fed president Beth Hammack said the Fed has the "luxury of being patient as we assess the path forward for inflation".
The pound was quoted at USD1.2421 at the London equities close Tuesday, higher compared to USD1.2381 at the close on Monday.
Comments from a UK policymaker also grabbed the headlines.
Monetary Policy Committee member Catherine Mann said price and wage rises across the UK economy will be hampered despite an expected spike in inflation this year because of a job market downturn.
She forecast a "further loosening of the labour market" in 2025, partly driven by extra company taxes announced in the October budget.
In a speech in Leeds, Mann said this would follow a "non-linear" path, adding: "Already, the labour market has all but stopped adding jobs with employment nearly flat."
Mann was speaking after she voted for a 50 basis points cut to interest rates at the Bank of England's February policy meeting.
The decision made her an outlier, especially given her 'hawkish' prior views, with most rate setters opting for a quarter point reduction.
The euro stood at USD1.0349 at the European equities close Tuesday, higher against USD1.0311 at the same time on Monday.
Against the yen, the dollar was trading higher at JPY152.31 compared to JPY151.75 late Monday.
On London's FTSE 100, BP fell 0.7% as investors digested weak fourth quarter earnings ahead of a strategic reset later this month.
The London-based oil major has come under pressure, most recently from activist investor Elliott Investment Management, to shake-up the business.
On Tuesday, BP pledged to "fundamentally reset" its strategy, at an update on February 26, although it remained tight-lipped on the detail. BP did say that as part of the update it intends to "review elements of our financial guidance, including our expectations for 2025 share buybacks and capital expenditure".
In the fourth quarter, BP maintained its pace of quarterly buybacks at USD1.75 billion, which it intends to execute ahead of first-quarter results.
Chief Executive Murray Auchincloss said the update would see a "new direction" for BP.
"Building on the actions taken in the last 12 months, we now plan to fundamentally reset our strategy and drive further improvements in performance, all in service of growing cash flow and returns," he added.
Russ Mould, investment director at AJ Bell, said: "The market has heard a lot from BP about strategy and vision – it wants to see action."
"A clear and credible plan is desperately needed if BP is going to remain the master of its own destiny," he added.
The comments came as the London-based oil major reported pretax replacement cost profit of USD764 million for the final-quarter, tumbling 79% from USD3.57 billion a year prior. Underlying RC profit fell 61% to USD1.17 billion from USD2.99 billion.
For the full-year, pretax RC profit declined 59% to USD11.79 billion from USD28.58 billion and underlying RC profit fell 36% to USD8.92 billion from USD13.84 billion.
Topping the fallers, Entain, which dropped 12% after disclosing the sudden departure of Chief Executive Gavin Isaacs.
The Isle of Man-based betting operator, which owns Labrokes and Coral, said Isaacs, who only started on September 2, departs "by mutual agreement".
Analysts at Davy Research said: "We spoke to the company and they noted that although Isaacs and the board were aligned on group strategy, there were differences between him and the board which were seemingly unreconcilable."
Davy Research notes Entain is at a "critical point" in its turnaround journey, so the timing of this is "unfortunate and will likely cause investor concerns".
Retailers were in favour after retail sales rose in January, according to a closely watched report.
The BRC-KPMG retail sales monitor covering the five weeks from December 29 to February 1, showed total UK retail sales rose 2.6% in January, slowing from a 3.2% growth in December but improving from a 1.2% growth in January 2024.
"January sales kicked off a solid month for retail with stores delivering their strongest growth in almost two years, albeit on a weak comparable," said Helen Dickinson, chief executive of the British Retail Consortium.
JD Sports rose 2.3%, Tesco rose 0.3% and Primark owner AB Foods rose 1.0%.
Banks were also a firm feature, with NatWest up 0.9% ahead of full-year results on Friday.
Citi reiterated an 'overweight' rating on the banking sector ahead of earnings, with NatWest its top pick.
"We see greatest upside to consensus revenues at NatWest, which has strongest organic loan growth, better back versus front-book mortgage dynamics, a superior structural hedge uplift and a benefit from recent acquisitions."
Travel stocks were in the red, weighed by disappointing results from Tui, higher oil prices and unease over the Middle East.
Budget airline easyJet fell 2.7% and British Airways owner, IAG, fell 1.5%.
Brent oil was quoted higher at USD76.81 a barrel at the London equities close Tuesday from USD75.88 late Monday.
Gold was quoted higher at USD2,906.30 an ounce at the London equities close Tuesday against USD2,903.38 at the close on Monday. It had earlier hit an all-time high of USD2,944.72.
In Wednesday's UK corporate calendar, housebuilder Barratt Redrow reports half-year results.
The economic calendar for Wednesday has US inflation figures at 1330 GMT and eurozone industrial production data at 1000 GMT.
By Jeremy Cutler, Alliance News reporter
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