The FTSE 100 was up 0.82% in early trading today, as a tech-led rally on Wall Street towards record highs outweighed concern over the Iran war. Index moves are quoted as at 8.22am (07:22 GMT).
- FTSE 100 up 0.82%, DAX up 0.76% and CAC 40 up 0.48% in early trading
- Jefferies expects no Fed or ECB hike in October
- UK and French bonds flagged as the weak spot
- Informa agrees to buy Clarion for £2.24bn
Germany’s DAX gained 0.76% and France’s CAC 40 rose 0.48% over the same period. Sterling was at $1.3224, up 0.04%.
Jefferies sees no October hike
Mohit Kumar, global economist at investment bank Jefferies, expects the Federal Reserve and the European Central Bank to skip an interest rate rise in October. He sees the next increase in December, with only one more from each bank.
He says recent comments from the Fed’s Jefferson and Hammack and the ECB’s Lane have “moderated” on the need for hikes.
Jefferies stays long equities with a technology bias, citing strong earnings, capital spending and liquidity. Kumar warns that breadth is narrow, meaning the gains rest on a small group of shares.
Bonds and Iran are the risks
Kumar points to government bonds as the pressure point. He calls the French concern a “buyers strike”, meaning investors refusing to buy the debt, rather than a sovereign crisis, and says Jefferies is avoiding French debt. He puts the French spread, the extra yield over a benchmark, at 136 basis points, down from an intraday high above 150.
going after the weakest link in the deficit picture which is France and the UK
Mohit Kumar, Jefferies
On Iran, the country’s president has nominated Mehrdad Akhlaghi Ketabachi, a missile-programme veteran under EU and US sanctions, as defence minister. A parliamentary confidence vote is pending, and an acting minister has held the post since Aziz Nasirzadeh was killed in US-Israeli attacks early in the war.
Iranian oil exports have fallen to zero because of a US blockade. Kpler data cited by the Wall Street Journal puts crude flows through the Strait of Hormuz at 76% of pre-war levels, with refined fuel recovery possibly stretching into 2027.
Informa agrees Clarion deal
Informa, the UK events and academic publishing group, will buy business events firm Clarion for £2.24bn. It also plans to separate Taylor & Francis, its academic publishing arm.
