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Highlights:
- The FTSE 100 closed down 0.17% as investor optimism regarding Chinese stimulus measures waned.
- The OECD revised the UK’s growth forecast upward, projecting stronger economic performance than several G7 peers.
- Notable gainers included Rentokil Initial and Flutter Entertainment, while Rightmove and Prudential faced declines.
London stocks closed in the red on Wednesday as the initial optimism surrounding recent Chinese stimulus measures began to dissipate. The FTSE 100 index fell by 0.17%, ending at 8,268.70 points, while the FTSE 250 edged down 0.07% to 20,755.44 points.
The currency markets reflected this sentiment, with the British pound declining 0.47% against the dollar to trade at $1.3350 and slipping 0.28% against the euro at €1.1965. According to Patrick Munnelly of TickMill, UK shares showed mixed performance as investors reassessed the sustainability of the optimism spurred by China's extensive stimulus initiatives. Although the blue-chip FTSE 100 rose by 0.3% in the previous session, concerns arose regarding the adequacy of these measures to address deeper economic challenges in China.
China's central bank announced a reduction in its medium-term loan rate, but this did little to bolster market sentiment. The Organisation for Economic Cooperation and Development (OECD) released revised growth forecasts for the UK, projecting stronger economic performance compared to several G7 counterparts. The UK is now expected to be the second fastest-growing economy in the G7, following the United States. The OECD raised its 2024 growth estimate for the UK to 1.1%, attributing this to robust consumer spending, supported by rising wages and easing inflation.
Despite the positive outlook, the UK is predicted to have the highest inflation rate among G7 nations, which poses challenges for households facing a high cost of living. Globally, the OECD noted signs of stabilization as economies adjust to the aftermath of the pandemic and ongoing geopolitical conflicts.
On the London equity markets, Rentokil Initial experienced a gain of 4.46% following the appointment of Brian Baldwin as a non-executive director. EasyJet saw an increase of 2.2% after receiving an upgrade from JPMorgan Cazenove. Meanwhile, Flutter Entertainment surged by 6.93% due to the announcement of a significant share buyback, with projections indicating a doubling of profits by 2027.
Conversely, Rightmove fell 1.55% after rejecting a third takeover offer from Australia’s REA Group, while Prudential slipped by 2.02% as investors took profits from recent gains.
