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Investor sentiment remains sensitive to inflation data and the potential for sustained higher interest rates. The Federal Reserve’s stance, particularly following comments from officials like Beth Hammack, and the anticipated address by Fed chair Kevin Warsh at Jackson Hole, are key watchpoints. Corporate earnings, as demonstrated by Nvidia’s performance, can provide sector-specific uplift, but broader economic concerns can limit market-wide gains. Companies facing slowdowns in profit growth or trading ex-dividend may experience downward price pressure.
London’s FTSE 100 index finished lower on Thursday, as investor caution surrounding inflation fears overshadowed a rally in technology stocks buoyed by positive news from Nvidia. The benchmark index closed down 85.58 points, or 0.8%, at 10,792.54.
Across the Atlantic, Wall Street presented a more optimistic picture. At the close of London trading, the Dow Jones Industrial Average had advanced 0.5%, the S&P 500 index was up 0.7%, and the Nasdaq Composite had climbed 1.3%.
Nvidia’s strong performance in New York provided a significant lift to technology shares. The semiconductor giant reported second-quarter earnings that surpassed forecasts and offered better-than-expected revenue guidance. Nvidia’s chief financial officer, Colette Kress, indicated a 70% revenue growth expectation for fiscal year 2028, which concludes in January of that year, citing a “supply constrained outlook.” This projection exceeded analysts’ prior expectations of 45% growth.
Nvidia’s chief executive, Jensen Huang, described the upcoming year as poised to be “pretty extraordinary.” Kathleen Brooks, research director at XTB, commented on the company’s momentum, stating, “With revenues this big, and demand for its products getting bigger every month, it will be a brave trader who will bet against Nvidia.”
In London, technology-focused companies saw gains. Computacenter rose 7.3%, Polar Capital Technology Trust was up 1.5%, and Scottish Mortgage Investment Trust gained 0.8%. However, Dan Coatsworth, head of markets at AJ Bell, observed that the positive sentiment from Nvidia’s results did not broadly permeate the wider market.
Underlying concerns about persistent inflation remained a key driver of sentiment. Recent U.S. inflation figures were seen as increasing pressure on the Federal Reserve to consider further interest rate hikes. Susannah Streeter, chief investment strategist at Wealth Club, noted that investor sentiment appears to be shifting towards caution as focus returns to “worries about inflation proving sticky, huge government debt piles and the prospect of interest rates lingering at elevated levels.”
Cleveland Federal Reserve president Beth Hammack reiterated her call for higher interest rates, suggesting that current inflation data indicates the central bank remains distant from its target. Speaking from the Fed’s annual symposium in Jackson Hole, she stated, “I don’t want to prejudge anything. But I believe now is the time to act.” Fed chair Kevin Warsh is scheduled to address the same conference on Friday, though he has previously expressed reservations about providing forward-looking guidance.
The British pound remained relatively stable, trading at $1.3588 against the dollar and 1.1663 against the euro at the time of the London equity close.
In continental European markets, the Cac 40 in Paris fell 1.7%, while the Dax 40 in Frankfurt edged up 0.3%.
Minutes from the European Central Bank’s July meeting suggested ongoing deliberations regarding responses to supply-side shocks, according to Carsten Brzeski, ING Global head of macro. While the ECB maintained its interest rates in July, some members had advocated for a rate increase. Brzeski indicated that this could signal the ECB is moving closer to further tightening, with another rate hike potentially on the horizon at the central bank’s next meeting.
Yields on U.S. 10-year and 30-year Treasuries remained unchanged on Thursday.
On the FTSE 100, Prudential saw its shares fall 2.5% following a reported slowdown in new business profit growth for the six months to June 30. Despite a reported 9.8% increase in new business profit to $1.38 billion, analysts pointed to a deceleration in the second quarter growth rate.
Companies trading ex-dividend also contributed to the FTSE 100’s decline. Games Workshop was down 2.6%, Croda International fell 1.6%, and LondonMetric Property was 2.7% lower.
In contrast, the FTSE 250 index saw a notable gain from Halfords, which surged 11% after raising its full-year profit guidance amid strong trading conditions, partly attributed to warm weather. The retailer now anticipates between 55 million and 65 million in underlying pretax profit for fiscal year 2027.
On the AIM market, Thruvision jumped 31% after securing an order from its first Canadian government customer for its security technology solution.
Gold prices saw a slight increase, trading at $4,597.90 an ounce. Brent crude oil for October delivery was trading at $88.67 a barrel.
Among the top performers on the FTSE 100 were Computacenter, Sage Group, London Stock Exchange, Relx, and Experian. Major fallers included Entain, LondonMetric Property, Games Workshop, Prudential, and GSK.
Looking ahead, Friday’s global economic calendar includes Canadian economic growth figures, eurozone consumer confidence, French CPI data, and the Chicago PMI in the United States. UK corporate news includes half-year results from Beowulf Mining.
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