London stocks had popped higher by midday on Thursday as investors mulled disappointing earnings from US software giant Oracle and the latest policy announcement from the Federal Reserve, which cut rates as expected but signalled a long pause ahead.
The FTSE 100 was up 0.2% at 9,671.61, having opened in the red.
At its final meeting of the year on Wednesday, the Federal Open Market Committee voted 9-3 in favour of a rate cut, with the Federal Funds Rate being trimmed by 25 basis points to a range of 3.5% to 3.75%.
The decision was in line with analysts' expectations and similar to moves made in September and October, marking the sixth rate cut since September 2024 to bring borrowing costs to their lowest since 2022.
However, the scope of the dissent among policymakers was stark, with Austan Goolsbee and Jeff Schmid voting for no change to rates, while Trump-appointed Stephen Miran called for a 50bp reduction. This was the first time since 2019 that three FOMC members dissented.
Russ Mould, investment director at AJ Bell, said: "Another day, another rate cut. What's normally a driver for equity markets has become old news, and investors have shrugged off the Fed's latest reduction in US borrowing costs as it is becoming harder to guess where rates might go next.
"The fanfare around rate cuts was short-lived. European markets were nonplussed at the news, and Wall Street is set for a red day judging by futures prices.
"The Federal Reserve's committee members do not see eye to eye. While the central bank proceeded with an interest rate cut, two voters weren't in favour and Trump's wing man Stephen Miran continues to push for deep cuts.
"It's not out of the ordinary to see different views but it does create a challenge for whoever takes over from Jerome Powell as Fed chair next year.
"The US has avoided recession, the jobs market is softer but not crumbling, and inflation is proving to be sticky so one might take the view that further rate cuts could be minimal. However, we have a president who is keen for rates to come down a lot to help drive the economy, and who is doing their very best to have greater sway over the central bank."
Investors were also digesting second-quarter numbers from Oracle, whose shares tumbled in after-hours trading.
Total revenues surged 14% - or 13% on a constant currency basis - to $16.06bn in the three months to 30 November, while revenues from its core cloud business were up 34% at $8bn. However, Wall Street had been hoping for bigger increases, including total revenues of $16.21bn.
The Austin, Texas-based group also predicted a sharp uplift in spending. It now expects capital expenditure to reach around $50bn in the current fiscal year, $15bn more than its previous forecast in September.
Earnings per share surged 54% to $2.26, well ahead of the $1.64 pencilled in by analysts. However, the increase was largely due to the one-off $2.7bn pre-tax gain from the sale of Oracle's interest in chip manufacturer Ampere.
Mould said: "Tech stocks were out of favour after Oracle disappointed with its latest results. The slightest bit of bad news around tech has the potential to cause jitters among investors, given they're already on the edge of their seats worrying about excessive AI spending. The last thing they want to hear is a big tech company not earning as much as forecast and spending more than expected."
In equity markets, Entain fell as it said chief financial officer Rob Wood, who is also deputy chief executive, was set to step down after 13 years with the gambling and gaming group. Wood, who will leave in March 2026, is being replaced by Michael Snape, chief financial officer at International Distribution Services.
Primark owner Associated British Foods and Zigup fell as they traded without entitlement to the dividend.
Lloyds was knocked lower by a downgrade to 'neutral' at BNP Paribas, while NatWest was weaker after a downgrade to 'neutral' at Goldman Sachs.
On the upside, Drax rallied after the power generator said it expected full-year earnings to be at the top end of consensus estimates and said it could convert existing infrastructure at its North Yorkshire plant to run a data centre as soon as 2027.
Firstgroup gained as the transport operator said it has bought the UK sightseeing bus operations of RATP Developpement for about £17m as part of an effort to grow and diversify its First Bus business in two key markets.
Market Movers
FTSE 100 (UKX) 9,671.61 0.17%
FTSE 250 (MCX) 21,841.60 0.05%
techMARK (TASX) 5,571.26 0.22%
FTSE 100 - Risers
Ashtead Group (AHT) 4,963.00p 3.72%
Smurfit Westrock (DI) (SWR) 2,779.00p 3.08%
Convatec Group (CTEC) 231.60p 2.48%
Berkeley Group Holdings (The) (BKG) 3,780.00p 2.27%
Pearson (PSON) 1,043.50p 1.85%
Weir Group (WEIR) 2,948.00p 1.80%
Whitbread (WTB) 2,374.00p 1.67%
Sainsbury (J) (SBRY) 322.20p 1.64%
Diageo (DGE) 1,625.00p 1.44%
Rentokil Initial (RTO) 432.80p 1.38%
FTSE 100 - Fallers
Entain (ENT) 733.40p -3.47%
Associated British Foods (ABF) 2,089.00p -1.92%
Informa (INF) 917.20p -1.33%
Lloyds Banking Group (LLOY) 93.90p -0.99%
National Grid (NG.) 1,107.50p -0.85%
NATWEST GROUP (NWG) 614.20p -0.84%
Relx plc (REL) 2,981.00p -0.80%
The Sage Group (SGE) 1,064.00p -0.79%
Smith & Nephew (SN.) 1,240.00p -0.72%
Admiral Group (ADM) 3,048.00p -0.65%
FTSE 250 - Risers
RS Group (RS1) 636.00p 5.04%
OSB Group (OSB) 589.00p 3.24%
SDCL Efficiency Income Trust (SEIT) 51.60p 2.58%
W.A.G Payment Solutions (EWG) 97.00p 2.54%
Foresight Group Holdings Limited NPV (FSG) 418.00p 2.45%
Marshalls (MSLH) 177.60p 2.19%
FirstGroup (FGP) 187.80p 2.18%
Drax Group (DRX) 775.50p 1.91%
Paragon Banking Group (PAG) 831.50p 1.71%
Me Group International (MEGP) 161.00p 1.64%
FTSE 250 - Fallers
Ocado Group (OCDO) 214.40p -8.77%
Ceres Power Holdings (CWR) 293.80p -4.80%
Sirius Real Estate Ltd. (SRE) 90.20p -3.84%
Zigup (ZIG) 382.50p -3.16%
Partners Group Private Equity Limited. (EUR) (PEY) 10.10p -2.88%
Gamma Communications (GAMA) 897.00p -2.29%
Diversified Energy Company (DI) (DEC) 1,145.00p -2.14%
Investec (INVP) 520.50p -2.07%
Baillie Gifford Japan Trust (BGFD) 871.00p -1.91%
NCC Group (NCC) 137.20p -1.86%