London open: Stocks in the black as hawkish Yellen hits the pound
London stocks rose in early trade on Wednesday as the pound lost ground against the dollar, which was boosted by hawkish comments from Federal Reserve Chair Janet Yellen.
At 0840 BST, the FTSE 100 was up 0.4% to 7,316.89, while the pound was down 0.6% against the greenback at 1.3382 after Yellen hinted at one more rate hike by the end of the year in a speech in Cleveland on Tuesday.
The top-flight index tends to benefit from a weaker pound, as around 70% of its constituents derive their most of their earnings from overseas.
Speaking after the previous session's close at the National Association for Business Economics, Yellen argued against waiting until inflation had returned to its 2.0% target before tightening policy. She also said that the Fed should be wary of moving too gradually.
Nevertheless, she admitted there was uncertainty on various fronts, including the strength of the jobs market, what was implied by the current level of inflation expectations and even the fundamental forces behind inflation.
Spreadex analyst Connor Campbell said Yellen's comments "significantly increase the chance of a hike before the year is over, with most analysts picking December, not November, as the most likely date".
"Obviously the dollar jumped for joy at the news, with Tuesday’s gains continuing into Wednesday morning," he added.
In corporate news, Carillion shares surged following a press report that a Middle Eastern suitor is waiting to see what the construction firm has to say in its update on Friday before it makes an offer for the group.
Grainger pushed higher after the residential landlord said it delivered a strong second-half trading performance, while Inmarsat gained as it announced it will supply Air Asia Group with its next-generation GX Aviation in-flight broadband to more than 120 Airbus aircraft.
Standard Chartered was boosted by an upgrade to 'hold' from 'sell' at Investec, while Pearson was lifted by an upgrade to 'outperform' from 'underperform' at Exane BNP Paribas. Virgin Money advanced after KBW upped the stock to 'outperform'.
On the downside, Entertainment One was sharply lower after the television and film producer and distributor said its operating performance since March was on track with its full year targets, despite revenues from the reshaped film business being lower than last year.
Safety, health and environmental technology group Halma nudged a touch lower despite saying it made “good progress” in line with board expectations in its scheduled trading update for the period from 2 April.
PZ Cussons was in the red as it said it remains on track to deliver full-year growth in operating profits but sounded a cautious note by saying trading conditions in most markets remain tough and that it's become increasingly clear UK consumers are "shopping cautiously".
Diploma was on the back foot as it announced the retirement of chief executive Bruce Thompson after 21 years in the role.
Market Movers
FTSE 100 (UKX) 7,316.89 0.43%
FTSE 250 (MCX) 19,484.34 -0.10%
techMARK (TASX) 3,440.94 -0.03%
FTSE 100 - Risers
Pearson (PSON) 609.00p 4.37%
Standard Chartered (STAN) 735.10p 2.32%
Prudential (PRU) 1,748.50p 1.86%
Rio Tinto (RIO) 3,470.00p 1.55%
Royal Bank of Scotland Group (RBS) 265.20p 1.30%
British American Tobacco (BATS) 4,705.00p 1.18%
Anglo American (AAL) 1,300.50p 1.13%
HSBC Holdings (HSBA) 727.40p 1.13%
CRH (CRH) 2,700.00p 1.12%
Lloyds Banking Group (LLOY) 65.69p 1.08%
FTSE 100 - Fallers
Randgold Resources Ltd. (RRS) 7,385.00p -1.20%
Mediclinic International (MDC) 643.50p -0.77%
Fresnillo (FRES) 1,412.00p -0.70%
NMC Health (NMC) 2,699.00p -0.70%
GKN (GKN) 339.70p -0.64%
Severn Trent (SVT) 2,172.00p -0.55%
Paddy Power Betfair (PPB) 7,270.00p -0.48%
Whitbread (WTB) 3,679.00p -0.46%
Centrica (CNA) 188.80p -0.42%
National Grid (NG.) 939.60p -0.38%
FTSE 250 - Risers
Virgin Money Holdings (UK) (VM.) 279.80p 3.63%
Acacia Mining (ACA) 187.40p 2.97%
Countryside Properties (CSP) 339.10p 2.42%
Kaz Minerals (KAZ) 732.00p 2.09%
Ferrexpo (FXPO) 280.00p 2.00%
Inmarsat (ISAT) 632.00p 1.77%
Crest Nicholson Holdings (CRST) 518.50p 1.67%
Evraz (EVR) 297.50p 1.40%
Grafton Group Units (GFTU) 812.50p 1.31%
Indivior (INDV) 330.20p 1.29%
FTSE 250 - Fallers
Dairy Crest Group (DCG) 589.50p -5.68%
Entertainment One Limited (ETO) 245.30p -4.92%
PZ Cussons (PZC) 316.00p -4.07%
SSP Group (SSPG) 490.80p -3.29%
Thomas Cook Group (TCG) 114.30p -2.64%
Just Eat (JE.) 649.00p -2.48%
Spire Healthcare Group (SPI) 222.50p -1.64%
OneSavings Bank (OSB) 385.00p -1.43%
IG Group Holdings (IGG) 645.50p -1.38%
Provident Financial (PFG) 762.00p -1.23%