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London open: Stocks rise ahead of UK jobs data, Fed rate decision
London stocks rebounded on Wednesday ahead of UK jobs data and the Federal Reserve’s interest rate decision.
The UK jobs report at 0930 BST is expected to show employers added 60,000 jobs in the three months to April, compared to 44,000 in the previous period. The unemployment rate is forecast to remain at 5.1%.
The Bank of England is considering the health of the labour market in its policy decisions, including what to do with interest rates.
In the US, the Federal Reserve is expected to sit tight on interest rates in its policy decision at 1900 BST amid uncertainty surrounding Britain’s EU referendum on 23 June and following weak employment data for May.
Fed chair Janet Yellen on 6 June said the federal funds rate will need to rise “gradually over time” but was silent on the timing of an interest rate hike. Her dovish tone was viewed as a signal that a June rate hike was off the table.
While the Fed is not expected to raise rates on Wednesday, Yellen’s post-meeting press conference may give clues on the timing of the next hike.
“Fed President Janet Yellen’s biggest problem now is trying to reorientate market expectations about not only the potential rate path for this year, but also the US economy as well,” said Michael Hewson, chief market analyst at CMC Markets.
Meanwhile, Brexit news will be continued to be closely followed after polls this week have shown growing support for a vote to leave the EU.
Chancellor George Osborne warned that taxes would rise and spending would be cut if Britain votes to exit the EU.
In commodities, oil prices dropped on concerns about the global supply glut with Brent crude down 0.89% to $49.39 per barrel and West Texas Intermediate down 0.97% tp $48.02 per barrel at 0842 BST.
On the company front, Aveva Group slumped after it walked away from a second round of talks with French suitor Schneider Electric and has applied for its share to resume trading after their suspension.
Luxury goods maker Jimmy Choo gained after saying it had made a good start to the year and trading was in line with expectations despite headwinds facing the majority of the sector in 2016.
The Restaurant Group edged higher after appointment Barry Nightingale as chief financial officer.
Housebuilders continued to fall on Brexit fears with Berkeley Group and Barratt Developments in the red.
Mining stocks rallied, including Anglo American, Glencore and Antofagasta, as copper prices rose.
