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London open: Stocks rise ahead of FOMC minutes
UK stocks gained on Wednesday ahead of the Federal Reserve’s policy meeting minutes which will provide more details behind the central bank’s decision to keep interest rates unchanged.
The central bank announced it would maintain the federal funds rate at 0.25% to 0.5% following its 15-16 March policy meeting, citing low inflation and concerns about the risks of global economic and financial developments.
Fed Chair Janet Yellen last Tuesday urged caution on raising interest rates as a slowdown in emerging markets and falling commodities prices has weighed on the rest of the globe.
She said “caution is especially warranted” as inflation remains below the 2% target. The Fed’s preferred annual measure of inflation came in flat at 1.7% in February.
Yellen’s dovish remarks prompted many analysts to rule out a rate hike in April.
“Further muddying the waters we have had a succession of Federal Reserve policymakers come out in recent days suggesting a rate rise in April remains a real possibility, which rather begs the question as to why there was so little dissent over the decision to hold rates last month,” said Michael Hewson, chief market analyst at CMC Markets.
The market will now be looking for clues on the timing of the next interest rate increase in Wednesday’s meeting minutes.
Elsewhere, German industrial production rose 1.3% year-on-year in February, beating expectations for a 0.4% increase, the Economy Ministry revealed.
Still to come, US weekly mortgage applications at 1200 BST and weekly US oil inventories data from the Department of Energy at 1530 BST.
Oil prices rose following a volatile Tuesday with Brent crude up 2.2% to $38.73 per barrel and West Texas Intermediate up 3.0% to $37.00 per barrel at 0904 BST.
In company news, mining stocks rebounded from the previous day’s lows with Anglo American, BHP Billiton and Glencore among the top risers.
Glencore confirmed it has agreed to sell 40% of its agriculture commodities business to the Canada Pension Plan Investment Board (CPPIB) for $2.5bn (£1.8bn) cash, potentially followed by a further sale of 20% more in the long-term.
easyJet’s shares descended after reporting its load factor decreased in March as hundreds of flights were cancelled due to industrial action.
Construction and engineering firm Costain climbed after announcing the appointment of Dr Paul Golby as its new chairman, replacing David Allvey who will retire at the annual general meeting in May after seven years.
