Lloyds and GSK raise 2022 guidance, Alphabet reassures

Traders await another big US rates rise

Traders were today braced for more currency and stock market volatility as the US Federal Reserve prepares to reveal its latest move on fighting inflation.

Another hike in US interest rates of at least 0.75% to between 2.25% and 2.5% appears certain tonight, but it will be the messaging from policymakers that will have the potential to sway markets.

The latest rates meeting comes with the Fed between a rock and a hard place, with inflation far too hot at a 40-year high and growth showing signs of weakening significantly.

Any suggestion from Federal Reserve chairman Jerome Powell that another 75 basis points is being considered for September at a time of slowing economic growth is likely to end the uneasy calm that has descended over markets in recent days.

Last week, the S&P 500 index had its best week since June as the Vix gauge of volatility retreated from recent highs. Currency markets have also steadied, with the pound holding firm today at just above $1.20.

August’s Jackson Hole economic symposium and two sets of inflation and payroll reports mean there’s much that can happen before the next policy meeting.

UBS said today: “We expect Powell to continue to drive home the message that inflation is unacceptably high and that the Fed is solely focused on getting it under control.”

European markets were steady ahead of the meeting, with the FTSE 100 index up 32.08 points to 7338.6 after a busy session of corporate earnings drove several stocks higher.

Lloyds Banking Group and Reckitt Benckiser were up 4% and 5% respectively after upgrading full-year guidance, just behind Smurfit Kappa after the Dublin-based packaging firm reported an 86% jump in half-year profits.

Despite sharply higher input costs and supply chain pressures, Smurfit upped its dividend by 8% in a reflection of its confidence in prospects. Shares lifted 146p to 2848p.

GSK rose 10p to 1765p as chief executive Emma Walmsley bolstered sales growth expectations for the drugs business to as much as 8%. GSK’s former consumer healthcare business Haleon also raised guidance, sending its shares 8.8p higher to 317.7p.

The FTSE 250 index improved 64.72 points to 19,633.51, led by a rebound of 7% for Wizz Air after its first quarter trading update.