London pre-open: Stocks to slump after hawkish Fed

London stocks were set to drop at the open on Thursday after the US Federal Reserve struck a hawkish note overnight.
The FTSE 100 was called to open 110 points lower at 7,359.

CMC Markets analyst Michael Hewson said: “As we look to this morning’s European open, the late sell off in the US is expected to see European markets open sharply lower, as Asia markets slid bac sharply with the Nikkei down over 3.5%, as we look ahead to this afternoon’s US Q3 GDP numbers, and weekly jobless claims numbers.

“Sentiment probably wasn’t helped by reports during the press conference that the UK was also considering sending troops to eastern Europe.”

Hewson said there were no surprises around the Fed statement on Wednesday and the decision to keep monetary policy on hold. However, the press conference by chair Jerome Powell saw the heat quickly come out of the rally, “as Powell indicated that while a rate hike was likely to come in March, the FOMC wouldn’t hold back from continuing to do so at a faster pace than it did in the last tightening cycle, and that it would be appropriate to start shrinking the size of the balance sheet, as well at the same time”.

“The press conference also sent the message that the Fed could well raise rates at every meeting, or even consider a 50bps hike if the need arose, as Powell passed up the opportunity to rule out any of those possibilities,” he added

In corporate news, low-cost airline easyJet halved first-quarter losses as Covid-19 travel restrictions were eased and reported a step-up in bookings after the UK government lifted pre-departure testing requirements.

The company reported a headline loss before tax for the quarter ending December 31 of £213m, compared with £423m a year ago.

Real estate investment trust Tritax Big Box said it had successfully accelerated its development programme as part of an effort to capture strong occupier demand.

Tritax Big Box stated strong occupier demand and historically low levels of available space had combined to create “rental tension” across the UK. In order to capitalise on this, Tritax sped up its development programme, with 3.0-4.0m square foot of development starts expected over the next 12 months.

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