The FTSE 100 turned up on Wednesday after an early reading that had it lower. At 7am one screen showed the index down 0.4 per cent at 10,605. By later morning the cash market had risen instead. Trading Economics put the FTSE around 10,660, about 0.2 per cent higher, helped by easier global bond yields after the US midterm results. City AM, updating at 8.18am, said London had opened higher against forecasts of a fall.
Oil did the opposite of Tuesday morning. Brent was at 106.56 dollars at 8.25am on Tuesday after reports of strikes on Qeshm. On Wednesday it was back below 103 dollars. Qatar's foreign ministry said the United States and Iran are weighing new proposals from mediators. That talk is running alongside strikes Washington has described as defensive. Traders treated the proposals, not the last strike, as the morning's price.
Congress changes hands
Americans voted on Tuesday and handed the Democrats control of both the Senate and the House. The dollar eased against the pound and the euro as the results came in. The immediate City argument is not a new spending bill in Washington. It is whether a Democratic Congress makes the build-out of data centres harder, and therefore changes the price of the companies that sell the chips and the power. Stephen Innes of SPI Asset Management put it this way: the AI trade has spent months worrying about financing costs, and may now have to worry about the politicians who control the power grid.
Asia took the first hit. Japan's Nikkei 225 fell 3.6 per cent overnight, to its lowest since early May, and then recovered part of the loss. London, heavy with banks, oil and shops rather than chip designers, did not follow it down. A Democratic sweep is also being read as a check on further deficit-expanding laws under President Trump, which is one reason bond yields eased. The 10-year gilt's last London close on the Journal's screen remains Friday's 5.299 per cent. Wednesday's move is in the same direction, and it is not yet a new closing print.
Wednesday Morning, London Time
- FTSE 100 around 10,660, about 0.2 per cent higher after an early screen at 10,605.
- Brent crude back below 103 dollars, from 106.56 dollars on Tuesday morning.
- Democrats take the Senate and the House. The Nikkei fell 3.6 per cent, then pared some of it.
- Bank Rate is 3.75 per cent. Money markets price about an 80 per cent chance of a rise to 4 per cent on Thursday.
- Marks and Spencer half-year adjusted profit 403.2 million pounds. The shares still fell.
Marks and Spencer, and Thursday's vote
Marks and Spencer reported adjusted profit before tax of 403.2 million pounds for the six months to 26 September, more than double the 184.1 million pounds of a year earlier and just ahead of a 399 million pound consensus. The shares fell about 1.7 per cent. Dealers took profit after a strong run, and the high street is still living with Tuesday's warning from Associated British Foods on Primark's margins. A good number was not a rising price.
The date that matters is Thursday. The Monetary Policy Committee announces at midday. Money markets, as reported on Wednesday morning, put about an 80 per cent probability on a quarter-point increase, which would take Bank Rate from 3.75 per cent to 4 per cent. It would be the first rise since 2023 if the committee votes that way. Nothing is decided until Andrew Bailey and the committee say so. What the market is already asking is whether any rise would be described as the last. John Healey's Budget left a spending buffer the Bank can see. Oil is lower than it was yesterday morning. Neither fact binds nine votes in Threadneedle Street.