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London open: Shares rebound ahead of Fed’s interest rate decision
After an initial stumble, the FTSE 100 on Wednesday reversed the previous day’s slump ahead of the Federal Reserve’s decision on interest rates.
London’s top index had fallen into the red on Tuesday following a worse-than-expected slowdown in third quarter UK gross domestic product to 0.5% from 0.7% the previous three months.
By 0900 GMT, stocks were sitting up in Wednesday’s morning session as investors turned their attention to the Fed’s policy announcement at 1800 GMT.
The Fed is expected to keep rates at 0.25% amid low inflation and concerns about the risks arising from a slowdown in emerging markets. Investors, however, will be scrutinising the press release for any hints on when the first rate hike in nearly a decade will happen.
“While expectations for a rate hike have drifted well into 2016, we still don’t anticipate any real commitment/news on timing,” said Michael van Dulken, head of research at Accendo Markets.
Ahead of the Fed’s policy announcement, the US will see economic data on weekly mortgage applications and advance goods trade balance at 12 GMT and 1230 GMT respectively.
In the Eurozone, GfK’s forward-looking consumer confidence index fell to 9.4 in November from 9.6, as expected by analysts. GfK said the economic expectations are “decreasing significantly, seemingly as a result of the feelings created by the ongoing refugee crisis in particular”.
On the company front, BT jumped on news its £12.5bn acquisition of the EE mobile network has been provisionally approved by UK competition officials unconditionally and without remedies.
Lloyds Banking Group declined after reporting a decline in third quarter underlying profit after it was hit by a further charge for insurance mis-selling.
A big faller was Meggitt, which dropped more than 20% as the aerospace and industrial components supplier warned that full year profits will be well below forecasts after it endured softer trading during the third quarter, with a “marked deterioration” in September in energy markets.
Chilean copper producer Antofagasta edged lower after cutting its annual production target for the third time this year as it reported fairly stable output for the third quarter compared with the second.
British American Tobacco rallied after reporting a better-than-estimated fall in sales for the first nine months of the year.
