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On Friday, London stocks continued their upward trend by midday, with the FTSE 100 climbing 0.3% to 8,312.92. This gain was sustained as investors awaited a key speech from Federal Reserve Chairman Jerome Powell at the Jackson Hole Symposium.
Dan Coatsworth, an analyst at AJ Bell, noted that the FTSE 100 was edging closer to the record highs achieved in May. The index's progress was primarily driven by natural resources stocks, despite some weakness observed on Wall Street the previous night. Market expectations of a substantial 50 basis points rate cut from the Federal Reserve in September were diminishing as anticipation built for Powell's address. The speech was expected to provide insights not only on the Fed's September meeting but also on future monetary policy into 2025.
Tech stocks had experienced the most significant declines on Wall Street the day before, although these fluctuations were modest compared to the volatility seen earlier in the summer. Attention was focused on whether Powell would offer any guidance on the Federal Reserve's policy direction. Bank of England Governor Andrew Bailey also faced scrutiny as he was scheduled to follow Powell's speech at Jackson Hole, with hopes that he might shed light on the trajectory of UK interest rates.
Domestically, a survey by GfK revealed that consumer confidence remained steady in August. The GfK Consumer Confidence Barometer was unchanged at -13 from July, an improvement from -25 in August of the previous year. The survey showed that while sentiment regarding personal finances improved, economic expectations deteriorated for the first time in six months. The sub-index measuring personal financial outlook over the next year rose by three points to +6, potentially influenced by the recent Bank of England interest rate cut and speculation about future cuts.
The major purchase index, reflecting public confidence in making significant purchases, improved to -13 from -16, signaling positive news for retailers. However, two sub-indices related to economic sentiment declined further, with the outlook for the coming year falling to -15, marking the first decrease since February.
In the equity markets, Direct Line (LSE:DLG) experienced a decline after revealing an error in its 2023 Solvency II own funds calculation, though its solvency capital ratio remained above its risk appetite range. Melrose Industries (LSE:MRO) saw its stock drop following a downgrade to 'sell' by UBS. Conversely, Evoke, formerly known as 888, saw an increase in its stock after announcing the acquisition of New Gambling Solutions, a Romanian online betting and gaming operator. Hiscox (LSE:HSX) was also in the spotlight following the appointment of Colin Keogh as interim chair after the recent death of Jonathan Bloomer in a maritime incident.
