Market Report

On Wednesday, London stocks extended their gains, driven by a strong performance from airlines. Investors focused on Federal Reserve Chair Jerome Powell’s second day of testimony to Congress and the upcoming US inflation data.

The pound held near one-month highs, buoyed by investor expectations that U.S. interest rates would fall sooner than anticipated, which weakened the dollar. The main influence came from the dollar side, following Powell’s statement in his semi-annual testimony that the U.S. is "no longer an overheated economy."

As investors digested Powell’s comments, Wall Street trading got off to a mixed start early on Wednesday.

Gold prices edged up after Powell’s comments suggested a stronger case for interest rate cuts, while investors awaited a critical U.S. inflation report.

Oil prices rose on expectations of a drop in U.S. crude and gasoline inventories from the previous week. However, further gains were capped by the resumption of output in the U.S. Gulf as Hurricane Beryl’s threat diminished and Chinese consumer demand remained weak.

In company news, IAG's shares soared after Morgan Stanley upgraded the BA and Iberia owner from ‘underweight’ to ‘overweight’ and raised its price target. The bank noted that its earlier concerns were alleviated as capacity growth now appears more supportive of pricing in both the short and medium term.

In other UK news, Crest Nicholson announced it was inclined to recommend Bellway’s revised £720m takeover offer, boosting shares in the housebuilder. Crest Nicholson acknowledged that the proposal remained subject to several pre-conditions, including due diligence.