Market report

Barratt activity slower | Aston Martin narrows loss


9pm: Fed lifts rate

The US Federal Reserve raised interest rates by a quarter of a percentage point and indicated it may now pause to give officials time to assess the fallout from recent bank failures and monitor the course of inflation.

The unanimous decision lifted the Fed’s benchmark overnight interest rate to the 5%-5.25% range, the tenth consecutive increase since March 2022.

At a press conference following the release of the statement, the bank’s chair Jerome Powell said the Fed still views inflation as too high and said high price pressures remain a matter of concern and Mr Powell said it is too soon to say the rate hike cycle is over.

“We are prepared to do more with rate rises if needed, and officials did not decide at the meeting to pause on a hike at the June policy meeting, and what happens next on rates is a decision that officials will make on a “meeting by meeting” basis, he said.

4.30pm: Market lifts ahead of US interest rate decision

The FTSE 100 remained in positive territory ahead of he latest news on US interest rates.

“The Fed is widely expected to deliver what could be its final rate hike in this cycle of 25 basis points so barring any big shock on that score, the focus will fall on the comments which accompany the decision,” said AJ Bell investment director Russ Mould

“Confirmation that rates will be put on hold after today, while largely anticipated in the market, could nonetheless give sentiment a bit of a boost. The reverse, on the other hand, could really knock confidence.

“The continuing sell-off in US regional banks highlights to the Fed the risks of stretching the financial system to breaking point if it remains in hawkish mode.

“All the while the threat of a debt ceiling crisis in Washington looms over everything. There have been panics like this before and everything has ultimately been resolved at the eleventh hour. Some sort of fudge remains the most likely outcome.

“Still, a highly partisan political backdrop across the Atlantic means the risk of the US defaulting on its debts is possibly as high as it’s ever been.”

The FTSE 100 closed 15.34 points higher at 7,788.37.

7am: Barratt Developments

Castlewell Ellon Barratt

Barratt Developments said build activity has continued to reduce in line with reservation activity over the period with 303 (2022: 359) equivalent homes (including JVs) built per average week.

Construction output in the financial year to date has equated to 319 (2022: 345) equivalent homes per week.

“We will continue to pro-actively manage our construction activity to ensure we have efficient working capital across our sites and build phases,” it said in a trading update.

Chief executive David Thomas reported “more positive sales rates” and said the company was now fully forward sold for FY23.

“As a result, we expect to deliver full year adjusted profit before tax in line with current market expectations,”

7am: Reach

Record and Express

Group revenue at the publisher of the Daily Record and Express was down 5.9% in the first four months, against strong comparatives.

This was broadly unchanged from the year to date performance highlighted in the full year results in March, and in line with expectations.

Print revenue for the four months to 23 April was down 3%. Advertising revenue for print fell 19.2% and revenue for digital was 14.5% lower.

A rise in cover price rises produced a 2.1% uplift in circulation revenue, helping to maintain buoyancy.

Full story here

7am: Lloyds Banking Group

Lloyds Banking Group has joined its peers by beating quarterly profits forecasts with earnings rissing on the back of higher interest rates.

First quarter pre-tax profit came in 46% higher at £2.26 billion, better than the £1.95bn average of analyst forecasts.

Like NatWest, though, deposits fell sharply, by £2.2bn to £473.1bn, including a reduction in retail current account balances of £3.5bn.

Full story here

7am: Scottish Mortgage Investment Trust

The board of Scottish Mortgage Investment Trust has appointed Sharon Flood and Vikram Kumaraswamy as independent non-executive directors of the company, with effect from 17 May.

7am: Aston Martin

Luxury carmaker Aston Martin Lagonda reported a narrowing quarterly pretax loss and maintained its 2023 outlook.

It said it was benefiting from the strong sales of its sport utility vehicle DBX and higher selling prices.

The loss before tax for the three months to 31 March was £74.2 million, against £111.6m a year earlier.

Global markets

Wall Street closed significantly lower, with regional bank shares in focus after the failure of First Republic over the weekend.

The latest jobs data also fuelled speculation that the US economy was slowing down.

At the close, the Dow Jones Industrial Average was down 1.08%, while the S&P 500 fell 1.16% and the Nasdaq Composite finished 1.08% weaker.

IG chief market analyst Chris Beauchamp, said: “Last week saw risk appetite revive on better earnings from tech giants, but a host of worries about interest rates, further bank crises, the US debt ceiling and of course pre-Fed nerves have conspired to prompt a reversal in equity markets.”

The dollar weakened slightly against sterling, down 0.04%.

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