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On Wednesday, London stocks made a recovery, driven by an increase in metal miners and renewed optimism about potential U.S. interest rate cuts. However, caution ahead of the UK parliamentary elections limited further gains. The FTSE 100 rose by 0.35% following a recent two-month low, while the mid-cap FTSE 250 also saw a small increase.

Federal Reserve Chair Jerome Powell's remarks about the country's "disinflationary path" and the need for more data before considering interest rate cuts raised hopes for earlier rate reductions. Industrial metal miners led the gains on the benchmark with a 1.8% rise, supported by higher copper prices. Most sectoral indices traded higher, except for investment banking and brokerage stocks, which fell by 0.5%.

Investors remained cautious ahead of the UK parliamentary elections scheduled for Thursday, with opinion polls indicating a potential change in power after 14 years of Conservative rule. Keir Starmer and Rishi Sunak both warned voters about dire economic consequences if the opposing party wins as they wrapped up their campaigning. The focus now shifts to the upcoming non-farm payrolls data in the U.S. on Friday, which will offer further insights into the Fed's monetary policy direction.

JD Sports, a British sportswear retailer, is the top loser on the FTSE 100, down 3.1% at 114p. This comes after Barclays downgraded the stock to 'underweight' and cut the price target to 110p from 140p. Nike's weak Q4 prompted the downgrade, as JD Sports has about 50% revenue exposure to the U.S. sportswear retailer. This follows Nike's gloomy sales forecast at the end of June, which affected stocks of sportswear retailers across Europe, the UK, and the U.S. The brokerage cited downside risks from weakness in lifestyle vs. performance and the speed of turnaround. JD stocks have fallen about 31% year-to-date.

UK mining companies are experiencing a rise in their stock prices, with shares up 1.9% at 6,875 pence as copper prices increase. This contrasts with the FTSE 100, which is up 0.35%. Rio Tinto, the largest sub-index constituent, is leading the gains with a 2.3% increase due to solid copper prices and a brokerage raising its price target. The surge in copper prices is attributed to a weaker dollar, renewed optimism for U.S. rate cuts, and supply concerns outweighing weak demand from China. JP Morgan has raised Rio Tinto's price target to 6,650p and Antofagasta's to 1,850p. JPM Commodities Research predicts a delay in recovering Chinese copper demand until later in 2024. Macquarie forecasts increased volumes across all operations for Rio Tinto except in Canada for the June quarter. Other sub-index constituents, Antofagasta and Glencore, have also seen gains of 2.5% and 2% respectively, making them top gainers on the FTSE 100 index. Anglo American has seen a more modest rise of 0.3%.
 

Technical & Trade View

FTSE Bias: Bullish Above Bearish below 8225

• Above 8363 opens 8500
• Primary support 8000
• Primary objective 8023
• 5 Day VWAP bullish
• 20 Day VWAP bearish

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