- Fed held rates steady last night
- Trump tariff surprise swoons copper
- Stock markets rise on positive earnings news
- Oil pushes higher, currencies mixed
Steve Clayton, head of equity funds, Hargreaves Lansdown:
“US rate setters left interest rates unchanged when they met last night. Federal Reserve Chair Jerome Powell declined to give any indications as to whether rates might fall at the next meeting in September. Often, that might have been enough to send traders scurrying for cover, but strong earnings results from some of the leading US tech companies have kept sentiment strong, allowing markets to make new gains this morning.
Microsoft and Meta, the owner of Facebook both saw their shares jump sharply in after-hours trading in response to strong earnings releases. The AI boom continues unabated and Microsoft and Meta are both investing heavily. Microsoft said that it intends to spend over $30 billion in the current quarter alone to build out the data centres necessary to accommodate surging investment into AI capacity.
In the UK this morning, a whole raft of earnings releases have been generally well received. Rolls Royce, Rentokil Initial and St. James Place are currently topping the FTSE leaderboard after issuing positive trading updates. In the midcap segment of the market, retirement specialist Just Group stands out with a rise of almost 70% after accepting a takeover offer from Brookfield Wealth.
Copper markets were upended overnight when tariff arrangements were announced that exempted key grades of copper products from import tariffs in the US. Previously, markets had anticipated tariffs of up to 50% would be imposed, prompting a rush to move physical copper into the US ahead of the tariff’s introduction. That in turn had pushed the price of US copper futures sharply higher in recent months compared to similar contracts trading in London. The sudden realisation that there was no need for the market to be so dislocated sent US copper prices tumbling back down toward the London benchmark, leaving US buyers nursing heavy losses.
Rentokil Initial investor heaved a sigh of relief this morning when the group announced reassuring trading for the half year and reiterated their expectations for the remainder of the year. Having fallen from around the 600p level two years ago, they have been trading around the 350p level in recent weeks, so Rentokil Investors could have been forgiven for feeling like the rats were getting the better treatment. Today’s news that there are signs of improvement in trading at the Group’s key US Pest division was enough to rally spirits, with investors pushing the stock as much as 12% higher.
The rising tensions between the US and Russia over the war in Ukraine are continuing to unnerve the energy markets. Crude oil futures have risen further over the last 24 hours to leave Brent trading at around $73 per barrel. Meanwhile, the currency markets are reversing some of yesterday’s gains for the Japanese Yen, which today stands at Y149.7 against the dollar. Sterling and the dollar are both pretty directionless today, losing ground against some currency pairs whilst gaining against others. Currently the pound is trading marginally better against the US dollar at $1.325 and slightly weaker verses the euro at €1.158.”
