London midday: Stocks fall ahead of Fed rate decision, US election

London stocks were under pressure on Wednesday on US election worries and on caution ahead of the Federal Reserve’s interest rate announcement.

At midday, the FTSE 100 dipped 0.28% to 6,897.98 points.

Investor sentiment was knocked by a new poll which put Republican candidate Donald Trump in the lead in the US presidential race. The added support for Trump comes in the wake of last Friday’s news that the FBI is taking another look into the emails of Democratic presidential candidate Hillary Clinton.

“The sudden change in fortunes set in train on Friday has seen investors run for cover amid a realisation that Trump might actually win,” said Joshua Mahony, market analyst at IG.

“Historically the economic path of the US economy has changed little in election years, yet it is the uncertainty that it would create which has many worried.”

Meanwhile, the Federal Reserve is set to announce its latest policy decision at 1800 GMT. With the proximity of the elections next week, economists expect the central bank will keep interest rates unchanged.

Investors will be scrutinising the Fed’s policy statement for clues on whether a widely-expected rate hike in December is likely, amid signs the US economy is improving.

“However, with the election outcome once again so uncertain, I wonder whether they’ll opt against any reference to the next meeting and simply reiterate the improved economic conditions,” said Oanda’s Craig Erlam.

“The latter could be taken by the markets that they are overpricing a hike, particularly in the event of a Trump victory.”

The US also sees the release of the private payrolls report from ADP at 1215 GMT, which is seen as a precursor to the highly-anticipated non-farm payrolls on Friday.

Data on weekly crude inventories from the Energy Information Administration at 1430 GMT will also be in focus amid worries about the global supply glut.

Earlier, the American Petroleum Institute said that crude stockpiles rose by 9.3 million barrels in the week to 28 October, more than nine times the amount expected by analysts polled by Reuters.

Brent crude dropped 1.3% to $47.52 per barrel and West Texas Intermediate slid 1.5% to $45.97 per barrel at 1132 BST.

On this side of the pond, the seasonally adjusted Markit/CIPS UK construction purchasing managers’ index edged up to 52.6 in October from 52.3 the months before. A reading above 50 signals an expansion.

"The latest reading pointed to the fastest upturn in activity since March, although the rate of growth was only modest and still much softer than the average since the recovery began three-and-a-half years ago," Markit said.

Elsewhere, Nationwide revealed UK house prices rose 4.6% in October from a year ago to an average of £205,904, slowing from 5.3% growth in September. Compared to a month ago, prices in October were flat following a 0.3% month-on-month rise in September.

In corporate news, retailer Next pushed higher after it trimmed its full-year sales guidance following a drop of almost 6% in third-quarter retail sales but said profits would come in as expected thanks to cutting its cloth more severely.

Housebuilder Persimmon advanced after it said trading in the third quarter following the Brexit vote was “encouraging” but remained cautious about new land investment due to the economic uncertainty brought about by the referendum.

Ryanair flew higher after reporting a 13% jump in traffic in October to 10.9m customers, as the load factor – which gauges how full the planes are – nudged up to 95% from 94%. HSBC upgraded the stock to ‘hold’ from ‘reduce’ and raised the target price to €12 from €8.50.

The bank also upgraded EasyJet to ‘buy’ from ‘reduce’ and lifted the target price to 1,150p from 800p, sending the share price higher.

G4S surged as it said revenue in the nine months to the end of September rose 5.7% from the same period last year.

On the downside, Rolls-Royce nudged lower after announcing that Andreas Schell has been appointed as chief executive officer of the Power Systems division.

OneSavings Bank declined despite posting a 13% rise in its nine-month underlying loan book.

Just Eat slipped a touch after upping its expectations for full-year revenues and adjusted earnings as it said orders in the UK were up 28% in the third quarter, which was a slowdown from 50% growth in the same quarter last year.

JD Wetherspoon slid after it warned that sales slowed in recent weeks and said it expects higher costs for the remainder of the year.

Market Movers

FTSE 100 (UKX) 6,897.98 -0.28%
FTSE 250 (MCX) 17,455.88 -0.38%
techMARK (TASX) 3,340.26 0.25%

FTSE 100 - Risers

Next (NXT) 5,005.00p 4.05%
Associated British Foods (ABF) 2,549.00p 2.99%
easyJet (EZJ) 967.00p 2.82%
Randgold Resources Ltd. (RRS) 7,515.00p 1.62%
AstraZeneca (AZN) 4,583.50p 1.58%
Fresnillo (FRES) 1,744.00p 1.51%
Persimmon (PSN) 1,762.00p 1.44%
Marks & Spencer Group (MKS) 346.70p 1.32%
Polymetal International (POLY) 949.50p 1.17%
Travis Perkins (TPK) 1,383.00p 1.17%

FTSE 100 - Fallers

Standard Chartered (STAN) 646.00p -4.05%
3i Group (III) 652.00p -2.18%
Tesco (TSCO) 209.65p -1.67%
Ashtead Group (AHT) 1,240.00p -1.51%
Royal Dutch Shell 'A' (RDSA) 2,083.50p -1.49%
Glencore (GLEN) 242.85p -1.46%
Carnival (CCL) 3,883.00p -1.32%
Royal Bank of Scotland Group (RBS) 184.30p -1.23%
Morrison (Wm) Supermarkets (MRW) 221.00p -1.21%
Royal Dutch Shell 'B' (RDSB) 2,172.50p -1.21%

FTSE 250 - Risers

G4S (GFS) 240.30p 9.18%
NCC Group (NCC) 203.00p 4.59%
Smurfit Kappa Group (SKG) 1,825.00p 3.69%
Sports Direct International (SPD) 285.50p 3.33%
Clarkson (CKN) 2,020.00p 2.28%
BTG (BTG) 634.50p 2.09%
Telecom Plus (TEP) 1,193.00p 1.88%
CMC Markets (CMCX) 192.50p 1.85%
Crest Nicholson Holdings (CRST) 428.40p 1.76%
Acacia Mining (ACA) 544.50p 1.68%

FTSE 250 - Fallers

Wetherspoon (J.D.) (JDW) 835.50p -5.91%
Hunting (HTG) 468.10p -4.59%
Tullow Oil (TLW) 252.90p -4.57%
Amec Foster Wheeler (AMFW) 419.80p -4.05%
Just Eat (JE.) 539.50p -3.83%
Henderson Group (HGG) 222.60p -3.18%
esure Group (ESUR) 262.90p -2.92%
Kaz Minerals (KAZ) 277.60p -2.80%
Softcat (SCT) 314.10p -2.76%
Weir Group (WEIR) 1,617.00p -2.59%