FTSE 100 slips back with Wall Street weak, dollar higher after Fed chair’s US rate hike comments

Date:

  • FTSE 100 holds off session low of 7,909.77
  • US stocks drop after Fed chair comments to Congress
  • Halifax says UK house prices rose 1.1% in February

3.55pm: Peak at a swifter pace

Assessing Federal Reserve chair Jerome Powell’s comments on US interest rates, Neil Wilson, chief market analyst at Markets.com commented: “So, Fed will go higher and for longer – but also might get to what it thinks the peak might be at a swifter pace. Think we see 50bps very much back on the table for the next couple of meetings – the potential to increase the pace of tightening again is noteworthy and probably the chief cause of the market reaction  – bonds had kinda already accepted higher and longer.”

He noted: “Swaps pricing in higher peak policy rate of 5.6% area in September but 6% is now absolutely more likely than not. The 2yr Treasury yield jumped to its highest level since 2007, up about 7bps to 4.96%, whilst the 10yr rose about 5bps to above 4%. The Fed effect caught up the global bond complex – traders also fully priced 150bps if ECB hikes by July.”

“The dollar saw strong bid off the back of rising Treasury yields and upbeat tone on US economy. GBPUSD plunged to its lowest since Jan – sterling had been offered throughout the session after briefly hitting a one-week high in early trade ahead of the remarks…failure to breach the resistance lent support to bears and bulls capitulated after the trend line breach. The move takes it below the floor area around 1.191 and its 200-day SMA – sellers in control,” Willson added.

3.35pm: More for Melrose

 Shares in Melrose PLC got a lift after analysts at Bank of America Merrill Lynch upgraded their rating to ‘buy’ from ‘neutral’ and lifted the price target to 181p from 160p.

The bank’s analysts pointed to an improved outlook for the company’s aerospace business and said they now have more confidence in Melrose’s mid-term target for Ebit margins of 14%.

They also said that widebody production increases at Airbus, improving engine production rates and aftermarket momentum support the company’s growth outlook.

In afternoon trading, Melrose shares were up 2.8% at 161.30p.

3.10pm: Powell pressures

The FTSE 100 index fell back into negative territory as Wall Street dropped after Federal Reserve chair Jerome Powell’s Congressional testimony indicated that the US central bank is prepared to speed-up rate hikes.

Powell said strong and sustained economic activity to start this year could prompt central bank officials to accelerate interest-rate increases and will likely lead them to lift rates more than they expected to combat high inflation.

Powell’s comments, prepared for delivery during the first of two days of Capitol Hill hearings on Tuesday, offered his first public acknowledgment that a pace of quarter-point interest-rate increases isn’t set in stone.

“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Powell said in the remarks prepared for delivery before the Senate Banking Committee. “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”

Around 45 minutes after the New York market open, the Dow Jones Industrials Average had dropped 201 points, or 0.6% to 33,229 points, while the broader S&P 500 and the tech-laden Nasdaq Composite also both fell 0.6%.

In London around 3.10pm, the FTSE 100 index was down 17 points, or 0.2% at 7,912, having dropped from the session peak of 7,959.77

2.45pm: Nerves in New York

The FTSE 100 index ran back from its session high as US stocks started flat to lower on Wednesday as traders cautiously await Fed chair Jerome Powell’s congressional testimony, set to kick off at 10.00am ET / 3.00pm GMT.

Around 15 minutes after the New York market open, the Dow Jones Industrials Average was off 21 points, or 0.06% at 33,409 points, while the broader S&P 500 shed 0.05%, but the Nasdaq Composite added 0.1%.

FOREX.com market analyst Fiona Cincotta said investors were shying away from taking out big positions ahead of Fed chair Powell’s congressional testimony.

“The timing of this testimony is more crucial after a series of stronger-than-expected data across February has seen more hawkish commentary from Fed speakers and investors ramping up their rate hike expectations,” Cincotta said.

“Investors will be looking for any clues over the potential size of the rate hike, with the market now pricing in around a 30% probability of a 50 basis point rate hike. This is up from a 0% likelihood just over 1 month ago.”

Cincotta added: “These testimonies, combined with Friday’s jobs report, will likely set the tone for trading over the coming weeks until the FOMC.”

In London around 2.45pm, the FTSE 100 index was just 3 points, or 0.03% higher at 7,933, having dropped from the day’s high of 7,959.77

2.25pm: Tagged by Japanese

A Japanese marketing giant is understood to have struck a £533mln deal to acquire Tag, the global content production group, in one of the largest UK advertising deals of the last 15 years, according to press reports.

The Guardian noted that the move by Dentsu – which became a global force in advertising with its £3.2bn takeover of UK media group Aegis in 2012, which was the largest-ever deal for a British-based ad group – marks its latest push to challenge rivals including WPP, IPG and Omnicom in the US and France’s Publicis Groupe.

Tag employs about 2,700 staff and creates marketing content for clients including New Balance, Calvin Klein, Ralph Lauren, Heineken and Unilever. The business has been owned by Advent International since 2017, when the private equity group acquired its British-based marketing services parent company, Williams Lea.

The Guardian said Advent International and Dentsu declined to comment on the deal, which values Tag at as much as €600mln, and the newspaper’s sources said it could yet fall through but is expected to be signed this week.

2.10pm: Wrap up warm

National Grid has asked power plants in Great Britain to generate extra electricity on Tuesday, according to newspaper reports, before the coldest night of the year.

The Guardian said National Grid’s electricity system operator (ESO) has issued an electricity margin notice, telling the owners of power plants to bring on extra power supplies between 4.30pm and 8.30pm on Tuesday. National Grid stressed this did not mean supplies were at risk.

On Monday, National Grid asked EDF to warm up a coal-fired unit at the West Burton A for potential use. On Tuesday, it asked a further unit at West Burton A and two units at Drax in Yorkshire to warm up.

They represent four of the five units covered by winter contingency contracts negotiated by government to keep coal-fired power plants on standby for emergency use amid heightened concerns over power supplies this winter.

The Met Office has issued weather warnings for rain and snow across the UK with temperatures of -4C expected in London and -6C in Birmingham. The freezing temperatures across the country are expected to trigger a rise in demand for power and heating.

1.30pm: Here’s a quick round-up of the top risers and fallers this Tuesday

Premier Foods’ share price went up 12% to 129.07p after disclosing that its full-year profit will be ahead of expectations after a strong start to the fourth quarter.

Just Group PLC (LSE:JUST) shares jumped 11% after announcing a 15% hike in the dividend after profits were stronger than expected last year

“Strong momentum” was reported in the first quarter of 2023, including Just’s largest pension transaction to date.

K3 Business Technology Group (AIM:KBT) shares advanced more than 7% as the software firm announced its largest ever licence contract for its flagship fashion product, K3 fashion.

Calnex Solutions PLC (AIM:CLX) shares plummeted by over 30% after the provider of test and measurement solutions for the telecoms sector warned that order delays will lead to a drop in results for the year to end-March 2024. 

Shares in Reach PLC (LSE:RCH) fell 13% after its chief executive Jim Mullen warned that the macro-economic ‘headwinds’ encountered last year ‘would likely continue’ in 2023.

His prediction accompanied full-year results from the publisher of the Daily Mirror and Express newspapers which showed inflation pressures resulted in a £40mln increase in costs in 2022.

UK tech services firm Spirent Communications (LSE:SPT) plc plunged 14% after announcing it expected to face challenges in the first half of this year.

“Since the fourth quarter of 2022 we have seen delays to some of our customers’ decision making,” chief executive Eric Updyke said, adding the FTSE 250-listed provider of technology testing and assurance services expects “a more challenging first half of 2023”.

Purplebricks Group PLC (AIM:PURP) saw its shares dropped 10% after the firm announced that major shareholder Axel Springer’s representative, Ait Voncke, has stood down from the UK company’s board.

Voncke was appointed to the board as a representative of Germany’s Axel Springer SE, a 26.5% shareholder in the company, in July 2022.

1.00pm: US stocks seen higher ahead of Powell testimony

Wall Street is expected to open higher before Federal Reserve chair Jerome Powell’s semi-annual report on monetary policy to Congress Tuesday and the Senate on Wednesday and ahead of a key employment report on Friday.

Futures for the Dow Jones Industrial Average rose 0.1% in Tuesday pre-market trading, while those for the broader S&P 500 index gained 0.2% and contracts for the Nasdaq-100 added 0.3%.

US stocks ended mixed following a choppy session on Monday, with the Dow closing 0.1% up at 33,431 and the S&P 500 adding 3 points, less than 0.1%, to 4,048. After trading 1.2% higher at one stage, the Nasdaq Composite turned around to close 0.1% lower to 11,676.

“Investors are largely unwilling to take the plunge ahead of two vital indicators later in the week, with most markets treading water in the meantime,” commented Richard Hunter, head of markets at interactive investor.

“Federal Reserve chairman Powell’s Congressional testimony and the non-farm payrolls report are the undoubted highlights of the week. Taken together, the two events will provide the latest update on the immediate past, present and future of the world’s largest economy and will be crucial in determining market sentiment.”

Hunter said that Powell’s remarks to Congress are likely to cover the Fed’s latest reaction to last month’s inflation data, which came in higher than expected. At present, he noted that the market is pricing in three more rate rises this year, including a 0.25% hike later this month, but any increase in hawkish rhetoric would likely spell danger for equity markets.

“Alongside the outcome of the latest Fed thinking, the jobs report on Friday will follow a blistering number from the previous month,” Hunter added.

“Expectations are for 225,000 jobs to have been added in February, as compared to 517,000 in January, while close attention will also be paid to both the unemployment rate and wage growth for clues in assessing the current state of the nation.”

12.40pm: South African GDP falls hit by power crisis

South Africa’s economy shrank more than expected at the end of last year after being battered by rolling blackouts imposed by the Eskom electricity monopoly.

South Africa’s economy contracted by 1.3% in the final three months of last year, more than expected, as the escalation in rolling power cuts caused most sectors to shrink, including mining and agriculture.

The outages have intensified and led President Cyril Ramaphosa to declare a state of disaster and appoint an electricity minister to tackle the crisis.

The latest contraction means South Africa’s gross domestic product has been largely flat since the end of 2019, even as its population has increased 3.5%.

Back in London and whilst not electrified the FTSE 100 is proving resilienct now close to its best levels for the day at 7,953.41.

12.22pm: Germany reviewing use of Chinese components in 5G network

Germany is reviewing the use of Chinese components in its 5G mobile network as it reassesses its ties with Beijing in the wake of Russia’s invasion of Ukraine, according to the Financial Times.

A spokesman for the interior ministry would not confirm German media reports that the government was planning a ban on parts by Chinese telecoms giants Huawei and ZTE, the FT said.

But he said it was conducting a review of the security risks posed by components already installed in Germany’s 5G networks and whether a change in the law was required.

“In particular, there are risks of misuse with regard to the security, confidentiality, integrity, availability or functionality of these critical telecommunications infrastructures,” the spokesman said.

11.50am: Game, set and match

A long-awaited investment by the former F1-owner CVC Capital Partners in the Women’s Tennis Association will be unveiled as soon as Tuesday, Sky News has learnt. 

The buyout firm which has struck major investments in football, rugby and motor racing is to unveil a stake in the body behind women’s professional tennis, paving the way for a shake-up of the sport’s commercial activities.

Sky News has learnt that the WTA could confirm today the sale of a 20% stake to CVC Capital Partners in a deal that values the organisation at US$750mln.

The strategic partnership, which has been under discussion for close to two years, will involve the establishment of a new company overseeing broadcasting and marketing operations.

11.34am: Credit card spending rises 5.9% in February

Consumer card spending grew 5.9% year-on-year in February, below the latest CPIH inflation rate of 8.8%, owing to a reduction in discretionary purchases amidst the ongoing the cost-of-living squeeze.

Data from Barclays, which sees nearly half of the nation’s credit and debit card transactions showed growth rates were also impacted by the lifting of omicron Plan B restrictions last year, which caused a spike in spending due to pent-up demand, bringing down this year’s figures.

The report showed spending on public transport jumped 22.6%, as commuters locked in rail fares ahead of the recent increase in train ticket prices on 5 March but despite rising food price inflation, the growth of supermarket spending slowed in February, as consumers continued to find ways to reduce the cost of their weekly shop.

Food shortages are influencing grocery shopping habits, as more than half of shoppers (51%) have noticed shortages of certain products at the supermarket, especially tomatoes, eggs, cucumbers, peppers and lettuce and three in ten Brits will cut back on Easter celebrations this year, with one in four spending less on Easter eggs.

 

11.00am: BoE’s Mann concerned by UK firms pricing power

More from Bank of England policymaker Catherine Mann who has warned that UK firms are continuing to raise prices, driving up UK inflation.

Speaking to Bloomberg TV, Mann said she is concerned by the strong pricing power exhibited by firms, which many consumers have been willing to pay.

She is concerned by the extent to which firms have strong pricing powers, and the acceptance of those higher prices by many consumers.

She said: “Even in the face of the cost of living crisis there are still a lot of people out there who are willing to pay higher prices, and firms are willing to set their prices high.”

She added that the price of gas and goods imported from abroad are “on the downturn”, and not rising as fast as they did last year.

Moving on to house prices and Mann said recent falls need to be put in context.

She pointed out prices have “appreciated dramatically” over the last couple of years creating a wealth effect which has only been slightly eroded by falls in prices since last summer.

Mann said: “We have to take into account what the starting point was, as well as the dynamics of the current pricing.”

She suggested the market could be in a “revival” rather than continuing to fall, noting the reduction in mortgage rates from the high point last autumn, and the increased competition with various lenders launching new mortgage products.

Mann also highlighted supply issues in the UK economy will limit how much it can grow. 

It is “really is striking how slow growth is in the UK,” she said, adding, “We did a supply stock take that we outlined in our monetary policy report for the February edition and it really is striking how slow growth is in the UK.”

“It is much slower than what we observed for the US and euro area,” she noted. Brexit “is a factor” on both the supply side and pricing power, she added.

Mann also warned that over-50s who retire early will have to return to the workforce to top up their pensions. She suggested people retiring at the age of 55 faced a challenge to make sure their retirement savings “match your longevity”.

10.12am: BoE’s Mann says pound vulerable to US/ECB rate hikes

After a bright start sterling slipped as Bank of England policy maker Catherine Mann said the pound could weaken further in the coming months as investors absorb the implication of the US Federal Reserve and European Central Bank’s plans to raise interest rates.

“There has been a quite a hawkish tone coming from the Federal Reserve and ECB,” Mann said in an interview on Bloomberg TV on Tuesday.

“The important question for me with regard to the pound is how much of that existing hawkish tone is already priced into the pound,” Mann said. 

“If it’s already priced in, then what we see is what we get. But if it’s not completely priced in, then there could be depreciation pressure.”

After opening higher the pound is now down 0.1% against the US dollar at US$1.2009.

 

10.00am: Reach tumbles as profits slump

Shares in Reach PLC (LSE:RCH) fell 8.2% after its chief executive Jim Mullen warned that the macro-economic ‘headwinds’ encountered last year ‘would likely continue’ in 2023.

His prediction accompanied full-year results from the publisher of the Daily Mirror and Express newspapers which showed inflation pressures resulted in a £40mln increase in costs in 2022.

Operating profits from the company, which also owns a stable of regional newspapers, dropped by 27% to £106.1mln in the 12 months ended December 31.

Revenue fell 2.3% year-on-year £601.4mln as advertising income began to weaken.

Mullen told investors: “We expect uncertain macroeconomic conditions to persist during 2023 but, as shown during the pandemic, we are effective at managing them, with an action plan in place to help mitigate the current headwinds. demand from advertisers.

Reach saw ad revenues plunge 15.9% in the year to December 25, while circulation fell 1.7% with falls limited by cover price increases in the second half of 2022.

Digital advertising, which has been a strong growth area for media firms, fell 2.7% in the second half of the year as the economic outlook worsened.

Meanwhile the FTSE 100 continues its lukewarm start to the day now at 7,935.34, up 5.55 points, or 0.070%.

9.31am: In The Style out of fashion, Just Group on the money

Some other stocks on the move include In The Style PLC which plunged 76% after it announced it has agreed to be sold in a £1.2mln deal that avoids administration. The company will be acquired by private equity investor Baaj Capital.

The founder and boss Adam Frisby will take an equity position in the newly established bidco formed for the purposes of the sale, becoming the chief executive of the business upon completion.

In early trade, the stock was down 5.34p at 1.66p, valuing the business at just £870,000.

Over in the FTSE 250 and nestled between John Wood and Premier Foods in the risers list is Just Group PLC (LSE:JUST). Shares rose 10% to 90.20p after better than expected results. Peel Hunt noted: “The outlook remains positive with Just Group in 1Q concluding its largest pension transfer deal so far (£513m), and a strong new business pipeline for the rest of the year.”

The broker continues to believe the stock is significantly undervalued and see 46% potential upside to its 120p price target. 

8.55am: FTSE hovers around opening levels

The FTSE 100 has pushed into positive territory now but remains around opening levels, up 7 points.

Susannah Streeter, head of money and markets, Hargreaves Lansdown said: “’Caution is set to stay the name of the game on financial markets as investors await testimony from the world’s most influential central banker.”

“With investors on tenterhooks about just how far interest rates will rise, and what effect this will have on the world’s largest economy, Fed chair Jerome Powell’s words in Washington as he speaks to senators later are likely to set off a ripple effect through indices.”

“Any hint that he’s swirling the latest data and is finding a pattern of inflation that’s stubbornly hard to shift, could trigger fresh falls in equities, and may see bond yields edge up.” 

Premier Foods surged 8.2% after a bullish trading statement. The owner of  Mr Kipling, Ambrosia, Bird’s Custard and Angel Delight, said it has continued to trade strongly in recent weeks, bringing the momentum it delivered in the third quarter into the final quarter of the year.

The company now expects revenue growth in the fourth quarter to be at least 10% ahead of the prior year led by a strong performance in the grocery business.

“Consequently, trading profit and adjusted profit before tax for this year are forecast to be ahead of the board’s initial expectations and are now expected to be around £155mln and £135mln respectively, which equates to growth of approximately 10% compared to prior year,” Premier Foods said.

But heading the other way was Wincanton PLC (LSE:WIN) which tumbled after it said it has lost a contract with HM Revenue and Customs (HMRC) for inland customs facilities with another provider taking over following a re-tendering process.

The logistics group added it is “extremely disappointed” by the decision after what it said has been acknowledged as a strong performance over the past two years.

The contract will be transferred in June 2023 with the impact to be felt in full year 2024.

Along with customer volumes and consumer spending being reduced generally due to the economic situation, results for the year to end March 2024 will now be “materially below” market forecasts of around £63mln, Wincanton said in a statement.

8.15am: FTSE 100 in cautious mood

London’s blue chip index edged lower in opening exchanges with investors in cautious mood ahead of the testimony by Federal Reserve chair Jerome Powell to the US Congress.

At 8.15am the FTSE 100 was at 7,923.56, down 6.23 points, or 0.079% while the FTSE 250 slipped to 20,034.33, down 29.78 points, or 0.15%.

Richard Hunter, head of markets at interactive investor, commented “Investors are largely unwilling to take the plunge ahead of two vital indicators later in the week, with most markets treading water in the meantime.” 

“Federal Reserve Chairman Powell’s Congressional testimony and the non-farm payrolls report are the undoubted highlights of the week. Taken together, the two events will provide the latest update on the immediate past, present and future of the world’s largest economy and will be crucial in determining market sentiment.”

Back in London and there was plenty of data and corporate updates for investors to digest.

UK house prices unexpectedly rose last month as recent reductions in mortgage rates and improving consumer confidence helped boost demand, according to the latest Halifax House Price Index.

Prices rose 1.1% between January and February, a surprise swing to positive and ahead of City forecasts for a 0.3% fall. House prices were up 2.1% compared with February 2022. Housebuilders failed to take heart with Persimmon PLC (LSE:PSN) down 0.6% and Bellway down 0.2%.

One share on the move in the FTSE 100 was Ashtead Group PLC (LSE:AHT) which rose 3.3% in early exchanges.

The construction equipment rental group said it expected its profits to surpass previous forecasts this year, as it plans to continue expanding in North America.

Ashtead posted US$609mln in operating profit in the three months to January 31, compared with US$449mln in the same period last year.

“Our business is performing well with clear momentum in strong end markets, which are enhanced by the increasing number of mega projects and recent US legislative acts,” said chief executive Brendan Horgan in a statement. 

“We now expect full year results ahead of our previous expectations and the Board looks to the future with confidence,” he added.

John Wood Group soared 12% after it revealed it had rejected a fourth bid approach from Apollo Global Management (NYSE:APO) valuing the firm at 237p per share.

“The board believes this latest proposal continues to undervalue the group and is therefore minded to reject,” the company said.

“The board will continue to engage with its shareholders and intends to engage further, on a limited basis, with Apollo,” it added.

On 22 February, John Wood announced it had unanimously rejected three unsolicited proposals from Apollo.

Greggs PLC (LSE:GRG) was little changed after reporting a healthy increase in sales and a slight improvement in profit.

The baker reported total sales up 23% to £1,513mln from £1,230mln in 2021 while pre-tax profits edged 1.9% higher to £148.3mln from £145.6mln.

Like for like sales improved 17.8% year-on-year and diluted earnings per share grew to 117.5p from 114.3p. A final dividend of 44.0p per share was declared taking the total payout to 59.0p from 57.0p.

The FTSE 250-listed firm baker is targeting 150 net openings in 2023 and sees a clear opportunity for significantly more than 3,000 UK shops in time.

7.53am: Solid growth in sales but profits only edge higher at Greggs

Greggs has reported total sales up 23% to £1,513mln from £1,230mln in 2021 while pre-tax profits edged 1.9% higher to £148.3mln from £145.6mln.

Like for like sales improved 17.8% year-on-year and diluted earnings per share grew to 117.5p from 114.3p. A final dividend of 44.0p per share was declared taking the total payout to 59.0p from 57.0p.

The FTSE 250-listed baker is targeting 150 net openings in 2023 and sees a clear opportunity for significantly more than 3,000 UK shops in time. Around 500 shops are now open until 8pm or beyond with further development planned for 2023 while 1,270 shops are now operating delivery services, generating about 5% of sales overall.

Looking ahead, Greggs said like-for-like sales in company-managed shops up 18.8% in the first nine weeks of 2023, in line with expectations and reflecting the impact of Omicron in the comparator period.

The firm remained confident in prospects for 2023, and the medium-term opportunity to become a significantly larger multichannel business.

John Moore, senior investment manager at RBC Brewin Dolphin, said: “Greggs has delivered good sales growth, but not much of that has landed in the bottom line – with like-for-like sales up 17.8% and profits just 1.9% ahead of the previous year.”

“Rising costs are undoubtedly a big part of that story, but the company is taking good steps towards mitigating those increases and continuing to grow through measures like later trading hours and new shop openings.”

7.36am: Surprise rise in house prices in latest Halifax survey

UK house prices unexpectedly rose last month as recent reductions in mortgage rates and improving consumer confidence helped boost demand, according to the latest Halifax House Price Index data.

Prices rose 1.1% between January and February, a surprise swing to positive and ahead of City forecasts for a 0.3% fall. House prices were up 2.1% compared with February 2022.

“Recent reductions in mortgage rates, improving consumer confidence, and a continuing resilience in the labour market are arguably helping to stabilise prices,” said Kim Kinnaird, director at Halifax Mortgages.

“Still, with the cost of a home down on a quarterly basis, the underlying activity continues to indicate a general downward trend,” he added.

“With average house prices remaining high housing affordability will continue to feel challenging for many buyers,” he continued.

The figures are in contrast with data released earlier in the month by the mortgage provider Nationwide, which reported that house prices fell on the month.

7.26am: Retail sales rise in February – BRC

Retail sales held up better than expected in February as consumers proved they are still ready to celebrate events such as Valentine’s Day despite the-cost-of living crisis, according to the British Retail Consortium-KPMG Retail Sales Monitor.

Total UK retail sales were up 5.2% in February against an increase of 6.7% for the same month last year, below the three-month average of 5.5% and above the 12-month average of 2.4%.

Food sales increased by 8.3% over the three months to February and non-food sales were up 3.2% while online non-food sales fell by 3.1% against a decline of 28% last February.

BRC Chief Executive Helen Dickinson said: “While the cost-of-living crisis has made customers increasingly price-sensitive, they are still ready to celebrate special occasions.

“This helped deliver strong sales of fragrance and jewellery for Valentine’s Day. Energy-saving appliances also continued to sell well, but the rush for warm coats and boots subsided as the January sales splurge satisfied customer appetite.”

“The economic backdrop means retailers face volatile trading conditions. Many consumers will be concerned as they prepare for further energy price and tax rises in April.”

Gabriella Dickens, senior UK economist, at Pantheon Macroeconomics said: “The most recent BRC data suggest retailers experienced some relief from the recent downward trend in retail sales in February, most likely reflecting a small rebound in consumers’ confidence.”

“A pause in the downward trend seems plausible given that GfK’s headline measure of consumers’ confidence rose to an 11-month high in February.”

“But we doubt it means consumers are going to hurry to the shops and splurge, given that GfK’s measure still was well below its average since 1978, +9,” she added.

She still expects “retail sales to be around 0.2% lower in Q2 than in Q4 2022, before then recovering gradually over the following six months.” 

7.20am: John Wood rejects fourth approach from Apollo

Wood Group (John) PC has rejected another a fourth bid from Apollo Global Management (NYSE:APO).

The cash offer valued the FTSE 250-listed firm at 237p per share, a 7p premium to the third and most recent attempt by Apollo to win over the company.

“The board believes this latest proposal continues to undervalue the group and is therefore minded to reject,” the company said.

“The Board will continue to engage with its shareholders and intends to engage further, on a limited basis, with Apollo,” it added.

On 22 February, John Wood announced it had unanimously rejected three unsolicited proposals from Apollo.

7.00am: FTSE seen slightly higher, Powell testimony in focus

The FTSE 100 is expected to open slightly higher ahead of an appearance before US Congress by the chair of the Federal Reserve Jerome Powell today and tomorrow.

Spread betting companies are calling the lead index up by around 11 points.

Michael Hewson at CMC Markets said: “Today’s main focus will be on the first day of testimony from Fed chairman Jay Powell to US lawmakers with questions likely to focus on the resilience of the US economy.”

“There’ll be the usual showboating by some US politicians who will want the Fed to go easy when it comes to future rate hikes, along with those who think the Fed has dropped the ball when it comes to inflation.”

The key focus will be on how Powell sees the US labour market, and whether the FOMC think that economic conditions have improved or deteriorated since the last Fed meeting.”

“Markets will also be paying attention to whether Powell continues to peddle the same narrative of disinflation, which was a hallmark of his last press conference. If he acknowledges that inflation could be much stickier than the Fed thought over a month ago, that could prompt a pullback in US equity markets.”

In the US, markets retreated during the trading session to end little changed. On Wall Street the Dow Jones Industrial Average closed up 40.47 points, or 0.1%, at 33,431.44. The S&P 500 closed up 2.78 points, or 0.1%, at 4,048.42 and the Nasdaq Composite closed down 13.27 points, or 0.1%, at 11,675.74.

In Asia on Tuesday, the Nikkei 225 index closed up 0.3% in Tokyo. In China, the Shanghai Composite was down 1.0%, while the Hang Seng index in Hong Kong was down 0.9%.

The S&P/ASX 200 in Sydney closed up 0.5%, as the Australia’s central bank hiked interest rates by 25 basis points to 3.6%, as expected.

Hewson commented: “While the guidance was hawkish there was a slight softening bias suggesting the bank might be close to a pause, with the Australian dollar slipping back a touch.”

Back in London and the early focus will be BRC-KPMG retail sales monitor and the Halifax house price index. A busy corporate calendar sees full year results from Fresnillo PLC (LSE:FRES), Greggs PLC (LSE:GRG), IWG PLC (LSE:IWG), Just Group PLC (LSE:JUST) and Reach PLC (LSE:RCH).

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