FTSE 100 Close: Standard Chartered pops after shock takeover rumours emerge

London’s FTSE 100 extended its hot start to 2023 today, helped along the way by Asia-focused Standard Chartered surging after news emerged rival lender First Abu Dhabi Bank has been mulling snapping up the firm.

Its shares shot up around a fifth during early exchanges in the City today, before paring back to eventually close up 6.78 per cent.

That gain pushed the premier index up 0.64 per cent to 7,633.46 points, taking its first week of this year’s gains to around two per cent.

Fashion retailer Next also popped nearly seven per cent after it released better than expected results this morning.

The firm, seen as a bellwether for the high street, did warn sales could slump in the future due to consumers cutting spending in response to cost of living pressures.

This week’s FTSE 100 rally has been mainly driven by China’s re-opening from zero-Covid and data that suggests some of the more apocalyptic predictions for 2023 have been overdone strengthening confidence.

Luxury goods have done particularly well – with Burberry bolstering the FTSE 100 and European markets, especially in Paris, boosted by firms like L’Oreal and LVMH which all rose sharply on an expected rise in Chinese spend.

Pound sterling weakened over one per cent against the US dollar, helping to lift top companies listed in London. A large proportion of the FTSE 100 is made up of firms that generate their income overseas, meaning they pocket a fillip when the pound drops.

Today’s advances came despite the US Federal Reserve’s warning on interest rates last night.

The central bank said it needs “substantially more evidence” proving inflation is falling quickly from red hot levels before ending its aggressive interest rate hike campaign in minutes from its latest meeting.

Fed officials unanimously agreed to slow the pace of rate increases to 50 basis points in December from a series of jumbo hikes to avoid front-loading too much pressure on the US economy.

Chair Jay Powell and the rest of the federal open market committee – who are expected to preside over a much-smaller 25 basis point increase in February – also warned against markets getting too carried away.

Though as a general rule rate hikes knock equities, yesterday US stock markets shrugged off the higher rate overall warning and focussed instead on signs that inflation had passed its peak, stepping up their confidence that jumbo-sized hikes are now off the table.

But, today Wall Street’s main indexes, the S&P 500, Dow Jones and tech-heavy Nasdaq, each shed around one per cent.

The Wall Street Journal’s dollar index – which measures the greenback against a basket of the world’s top currencies – gained 0.8 per cent.

Oil prices skidded around one per cent higher.