London stocks were set to fall at the open on Thursday following a downbeat session on Wall Street, as investors mulled the latest rate decision from the US Federal Reserve and looked ahead to a policy announcement from the Bank of England.
The FTSE 100 was called to open 25 points lower at 7,542.
On Wednesday, the Fed hiked rates by 25 basis points despite the recent turmoil in the banking sector,
CMC Markets analyst Michael Hewson said: “While this was broadly in line with expectations, a tweak to the statement was perceived to be more dovish, moderating the language by removing the reference to ‘ongoing increases will be appropriate’, with ‘some additional policy firming may be appropriate’.
“This helps to give the Fed wriggle room to pause at the next meeting if the data permits, as well as indicating that the end of rate rises could be close.
“This change saw yields, as well as the US dollar fall sharply, however, US markets after initially pushing higher also fell back and closed lower, after comments from US Treasury Secretary Janet Yellen, in separate comments to US lawmakers, said that there was no commitment to extending banking deposit insurance beyond the current $250k cap.
“Powell also admitted that a rate pause was considered due to the banking crisis, while also going on to say that the prospect of rate cuts this year was not being considered. A cursory analysis of the latest dot plot chart confirmed that thought process, even as markets continued to price that very possibility.”
A rate decision from the Swiss National Bank is due at 0830 GMT, while the BoE will make its announcement at midday.
In corporate news, automotive distributor Inchcape reported a rise in annual earnings driven by growth in new and used vehicle sales and higher prices.
Adjusted pre-tax profit rose 50% to £373m, while revenue grew 8% to £8.1bn. The total dividend was lifted 28% to 28.8p a share.
Elsewhere, LondonMetric Property said it had sold a portfolio of three multi-let industrial estates for £46m.
The estates, in England’s Midlands, total 446,000 sq ft across 113 units and generates £2.9m of yearly rental income. The deal reflects a net interest yield of 5.8% with the disposal slightly above book value at September 30, 2022.
