London midday: Stocks decline ahead of Fed's interest rate decision

London stocks were generally lower on Wednesday, along with oil prices, ahead of the Federal Reserve’s latest decision on interest rates.

Oil prices reversed Tuesday's gains as OPEC urged co-operation from oil producing nations outside the cartel to address the oversupply in the market to boost prices.

Brent crude fell 2.4% to $31.04 per barrel and West Texas Intermediate dropped 3.7% to $30.32 per barrel at 1122 GMT.

“Yesterday’s huge range in the oil price from highs of $32.70 to lows of $29.22 opens the door for a similar story today as the markets looks for support and resistance around the previous highs and lows,” said James Hughes, chief market analyst at GKFX.

“Profit taking and the ‘will they, won’t they’ feeling over a potential emergency OPEC meeting are causing the big swings. Russia remains the lynch pin in any potential deals on production as OPEC members will only act if a worldwide pact is agreed on with other oil producing regions, something that Russia has been against.”

Meanwhile, investors are bracing for the Federal Open Market Committee’s decision on interest rates at 1900 GMT. The Fed is expected to keep interest rates unchanged at 0.50% amid worries about risks stemming from the slowdown in emerging economies and falls in oil prices.

With no surprises anticipated, all eyes will be on the accompanying statement for clues on the timing of the next interest rates hike.

Last month the Fed decided to raise rates by 25 basis points, marking the first increase in almost a decade.

“Since the previous meeting in December the economic landscape has changed drastically with stock markets, oil prices and global growth forecasts all following a negative trajectory, while economic data from the States have been lacklustre,” said FXTM analyst Lukman Otunuga.

“Fundamentally these factors should dim the prospects of future rate hikes but with ongoing discussions suggesting that the Fed made a mistake by raising US rates in the first place, it seems likely that the minutes may adopt a hawkish bias similar to December in an attempt to retain credibility and prevent further disruption in the financial markets.”

In economic data, a report from Nationwide showed house prices rose 4.4% year-on-year in January compared to 4.5% in December. Analysts had pencilled in a 4.7% increase for this month.

The British Bankers’ Association revealed that loans for house purchases in December rose 19% year-on-year to 43,975 but it was lower than the previous month’s 44,533 approvals in November and analysts’ expectations for 45,500 approvals.

Still to come, data on US new home sales is due at 1500 GMT and a report on US crude oil inventories will be released at 1530 GMT.

Among corporate stocks, Royal Bank of Scotland's shares fell after the bank confirmed it will make a loss for 2015 and said it will set aside £500m of PPI provisions, $2.2bn for US residential mortgage-backed securities probes, and £4.2bn into its pension fund .

Rio Tinto was in the red as it agreed to sell its Mount Pleasant thermal coal project in Australia for an initial $83m rising to $224m plus future royalties.

Antofagasta slid as it reported a 10.6% drop in copper production for the full year to 630,300 tonnes, due to lower output at Los Pelambres and Centinela.

Sage rallied after reporting a 6.6% rise in revenue for the three months to 31 December, driven by strong software subscription sales.

Just Eat slumped after Morgan Stanley downgraded the stock to ‘underweight’ from ‘equalweight’ and cut the price target to 390p from 450p.

Wizz Air flew lower after saying net profit including exceptional items and foreign exchange dropped to €15.6m from €19.7m in the third quarter.

Britvic gained after reporting a rise in first quarter revenue as it reiterated its full year earnings guidance.

Aberdeen Asset Management jumped after reporting a better-than-expected fall in net outflows in the three months to 31 December 2015. Numis upgraded the stock to ‘buy’ from ‘hold’, saying that emerging market assets will “eventually recover and that with hindsight buying on the valuations available today will prove decent value”.

Market Movers

FTSE 100 (UKX) 5,882.13 -0.50%
FTSE 250 (MCX) 16,127.56 -0.32%
techMARK (TASX) 3,119.90 -0.05%

FTSE 100 - Risers

Sage Group (SGE) 589.50p 3.88%
Admiral Group (ADM) 1,722.00p 1.47%
Compass Group (CPG) 1,141.00p 1.33%
Carnival (CCL) 3,608.00p 1.12%
Relx plc (REL) 1,186.00p 1.11%
Aberdeen Asset Management (ADN) 235.00p 0.95%
Smith & Nephew (SN.) 1,151.00p 0.79%
Whitbread (WTB) 3,920.00p 0.75%
Dixons Carphone (DC.) 459.90p 0.74%
United Utilities Group (UU.) 930.50p 0.70%

FTSE 100 - Fallers

Anglo American (AAL) 240.85p -4.93%
BHP Billiton (BLT) 642.50p -3.46%
Antofagasta (ANTO) 365.90p -3.20%
Sports Direct International (SPD) 404.30p -3.16%
Royal Bank of Scotland Group (RBS) 252.90p -3.07%
Standard Chartered (STAN) 465.15p -2.55%
Capita (CPI) 1,139.00p -2.40%
Barclays (BARC) 179.10p -2.13%
ARM Holdings (ARM) 993.50p -2.12%
GKN (GKN) 276.00p -1.99%

FTSE 250 - Risers

Britvic (BVIC) 705.00p 3.98%
Acacia Mining (ACA) 196.20p 3.81%
Ocado Group (OCDO) 270.90p 3.28%
Aldermore Group (ALD) 213.50p 3.14%
Greencore Group (GNC) 373.00p 3.04%
DFS Furniture (DFS) 324.20p 2.92%
Cineworld Group (CINE) 492.10p 2.16%
Crest Nicholson Holdings (CRST) 552.50p 2.13%
Home Retail Group (HOME) 151.90p 2.08%
esure Group (ESUR) 241.60p 1.81%

FTSE 250 - Fallers

Just Eat (JE.) 390.00p -7.25%
Tullow Oil (TLW) 144.80p -7.12%
Evraz (EVR) 61.80p -4.78%
Wizz Air Holdings (WIZZ) 1,800.00p -3.28%
Wood Group (John) (WG.) 599.00p -3.07%
Entertainment One Limited (ETO) 150.50p -3.03%
Keller Group (KLR) 777.50p -2.93%
BTG (BTG) 586.50p -2.90%
Supergroup (SGP) 1,479.00p -2.83%
Petrofac Ltd. (PFC) 729.50p -2.80%