- FTSE 100 closes almost 86 points higher
- Wall Street manages the first profits
- The Fed rate decision will be at 7.15pm GMT
4.50pm: Fed rates rise
The FTSE 100 index ended the rise on Wednesday, recovering from some recent falls helped by the positive movements of the European Central Bank and as Wall Street made good initial progress, although the mood was still cautious in the face of result of the last Federal Reserve policy meeting and an expected 75 basis point rise in interest rates.
The UK blue-chip index closed at 85.95 points, or 1.2% up, at 7,273.41, below the session high of 7,313.70 but well above the session low. 7,186.50.
Meanwhile, in New York, around the close of London, the Dow Jones Industrial Average stood at 143 points, or 0.5% higher, at 30,508, while the broader S&P 500 index added a 0, 9% and the technology-laden Nasdaq Composite gained 1.7%.
Craig Erlam, senior market analyst for UK and EMEA in OANDA, commented: “This evening’s Fed meeting has always been the main event of the week, although other banks are reportedly central banks have been at stake ever since, which seemed like a simple 50. Rising base points and warning of at least one more to come have become much more complicated since the inflation reading Friday and the market crash.
“Markets are now almost completely up 75 basis points, the first since 1994, as well as another in July, with the rate reaching 3.5-3.75% in December. all suggest that a 100 basis point increase would be more appropriate under the circumstances, but that seems very unlikely to me this time.
“In any case, the message is clear. Many more short-term rate hikes will be called for to achieve some degree of control over inflation before it gets out of control. A soft landing also seems increasingly unlikely, with recession indicators that start flashing as interest rates rise. “
15.55: Breathing for European markets after the last falls
Leading stocks continue to gain ground as investors dismiss continuing concerns about the economy and rising interest rates.
They have been comforted by European Central Bank measures to combat rising European bond yields, but there is also nervousness ahead of the next Federal Reserve meeting, which could see US interest rates rise up to 100 basis points.
However, the FTSE 100 is in good spirits, rising 114.06 points or 1.59% to 7301.52, not far from the daily high of 7313.
Michael Hewson, chief market analyst at CMC Markets UK, said: “European markets have enjoyed a welcome respite today, after six days of losses, driven largely by news that the ECB was looking to speed up work. in a crisis tool to deal with the crisis: concerns about the fragmentation of EU bond markets and Italian bonds.
“[Italy’s] FTSEMib has been the biggest winner due to these reports, leading the highest rise, but we have also seen some decent moves in the rest of European markets as we look towards tonight’s Federal Reserve rate meeting .
“In the FTSE 100 we have seen broad gains driven mainly by finance and discretionary consumers, both of which have experienced large falls in recent days.”
London Stock Exchange Group PLC (LSE: LSEG) is the biggest increase in the leading index, 6.12% after a positive note from UBS analysts.
Premier Inn owner Whitbread PLC (LSE: WTB) is up 6.08% after its latest update, while technology investor Scottish Mortgage Investment Trust PLC (LSE: SMT) is up 5.55% after a positive start for the US Nasdaq market.
B&M European Value Retail SA (LSE: BME) improved 5.26% as a result of Barclays’ overweight rating.
But energy quotas fail to provoke. Shell PLC (LSE: SHEL, NYSE: SHEL) is down 0.63%, while BP PLC (LSE: BP.), Which has agreed to take a 40.5% stake in Asia Renewable Energy Hub in Australia, has down 0.4%.
3:22 pm: The ECB buys some time, analyst
The main event of the central bank is clearly the subsequent decision on US Federal Reserve interest rates.
But, as Craig Erlam said in Oanda, others have been in dispute.
This certainly means today’s unscheduled meeting of the European Central Bank.
He said: “The enigma of monetary policy is worrying the various central banks in very different ways. Take the ECB, which today convened an extraordinary meeting to address its unique problem of fragmentation across the bloc. Many years of QE have Suppressed yields and prevented any eruptions – increases, but the pandemic and the aftermath of inflation have changed dramatically, with the ten-year-old Italian jumping above 4% earlier this week.
“Following today’s emergency meeting, the ECB detailed its promises last week and pledged to apply flexibility to reinvest repayments under PEPP with the aim of reducing unwanted fragmentation and accelerating completion of a new anti-fragmentation instrument.
“It has basically been looking to buy some time and the fall in yields and the recovery of stocks, especially those in Italy, suggest that they may have done so. It is not a permanent solution, but for the time being it may be enough.”
2.45pm: Wall Street opens higher
US equities opened higher and prudent trading was expected ahead of the Fed’s decision on interest rates later.
In the open, the Dow had gained 243 points with 30,608 points.
The S&P 500 was up 35 points at 3,770 and the Nasdaq was up 114 points at 10,943 points.
Evelyn Partners’ associate director of investment strategy, David Goebel, said futures markets indicated that the Fed would raise interest rates by 75 basis points, with some chances of even an increase of 100 basis points. basic points.
“Our view is that a 100 basis point move could be as big as opening the committee to panic allegations and therefore unlikely,” he noted. “However, the Fed will want to look tough in the face of historically high headline inflation, so we believe it will meet market expectations of a 75 basis point increase.”
An increase of 75 basis points would be the largest rise in interest rates since 1994.
Back in the UK, the FTSE 100 is also flying and approaching the high of the day so far, with an increase of 105.55 points or 1.47% to 7293.01.
13.59: Retail sales in the United States disappoint
Meanwhile, ahead of the expected Federal Reserve rate hike later, some below U.S. figures.
Retail sales fell 0.3% month-on-month in May, as rising food and gasoline prices slowed demand.
Analysts expect 0.1% increase
– US Retail Sales Advance (M / M) May: -0.3% (0.1% Prev; 0.9% Earlier) – US Retail Sales Ex Auto (M / M) May: 0 .5% (0.7% earlier; 0.6% earlier) – US Retail Sales Ex Auto and Gas May: 0.1% (East 0.4%; Previous 1.0%) – Sales Control Group US retail May: 0.0% (east 0.3%; previous 1.0%)
– LiveSquawk (@LiveSquawk) June 15, 2022
The Empire’s manufacturing survey also fell short of expectations.
US Empire Manufacturing June: -1.2 (east 2.3; previous -11.6)
– LiveSquawk (@LiveSquawk) June 15, 2022
13.52: ECB plan disappoints – analyst
The European Central Bank has agreed to speed up work on a new policy tool to help combat leaps in eurozone bond yields.
The move comes after an unscheduled meeting following a rise in Italian yields to the highest level since the European sovereign debt crisis.
In a statement, the central bank said: “The pandemic has left lasting vulnerabilities in the eurozone economy that in fact contribute to the uneven transmission of the normalization of our monetary policy between jurisdictions.
“Based on this assessment, the Governing Council decided that it will apply flexibility to reinvest overdue repayments in the PEPP portfolio, with the aim of preserving the functioning of the monetary policy transmission mechanism, a precondition for the ECB to fulfill its price stability mandate.
“In addition, the Governing Council decided to instruct the relevant Eurosystem committees together with the ECB services to expedite the completion of the design of a new anti-fragmentation instrument for consideration by the Governing Council.”
Neil Wilson was disappointed with Markets.com.
He said: “He is not exactly the most decisive and did not require a meeting as such.
“The euro reduced the gains made during the session to return to where it was before the news of the ad hoc meeting. The EURUSD completed its round trip around 1.0420 after have risen to 1.05 before the session.
“Shares also fell below the DAX session high by 80 points when the ECB’s statement came out at around 13:10. Bond yields rose as the ten-year-old Italian returned to 3.95% from a session low of 3.759%., Still below the + 4% level previously negotiated.
“The market will be a little happier if the ECB is working on this tool, but it is very slow and does not seem to be fully in tune with the risks of further widening spreads, as rising yields reveal paperwork cracks during the last decade for QE and the Draghi effect “.
12.49pm: Italian bond yields fall as the ECB meets
As the unscheduled meeting of the European Central Bank continues to discuss the fall in the bond market, the 10-year Italian yield is falling again.
It is now down 31 basis points on the day to 3.91%.
The meeting began at 10 a.m. BST and was scheduled to last about two hours.
Bull case: The ECB meeting continues until substantial measures are agreed.
Bottom line: The ECB meeting continues until they can agree.
– Lorcan Roche Kelly (@LorcanRK) June 15, 2022
12.28pm: The eurozone trade deficit almost doubles due to energy costs
Ahead of the outcome of the European Central Bank’s unscheduled meeting, the latest snapshot of the eurozone economy shows a growing trade deficit.
It almost doubled to 32.4 billion euros in April, more than the 16.4 billion euros of the previous month, as the bloc imported more and more expensive energy as the war in Ukraine pushed up prices. .
Trade deficit of goods in the euro area 32.4 billion euros in …