London open: FTSE rallies as investors eye Fed announcement

London stocks rallied in early trade on Wednesday as investors eyed the latest policy announcement from the US Federal Reserve.

At 0825 GMT, the FTSE 100 was up 1.2% at 7,462.83.

Victoria Scholar, head of investment at Interactive Investor, said: "Amid the backdrop of volatile equity markets, it would be tempting for the Fed to kowtow to the sell-off and soften its stance at the conclusion of its two-day monetary policy meeting today. However, the US economy is grappling with four-decade high inflation, a problem that the Fed must remain laser focused on. At today’s meeting, the Fed is likely to signal plans to begin raising rates in March and to end its quantitative easing stimulus programme this quarter.

"This year’s sell-off in US indices has largely priced in the tightening path ahead with the potential for stocks to stabilise from here. Fed Chair Powell, who has been described as ‘Goldilocks in a suit’, will be treading a fine line, neither too hawkish nor too dovish, displaying credibility in the fight against inflation without spooking the current precarious market mood."

In equity markets, travel-related shares were the standout performers, with BA and Iberia owner IAG the top riser on the FTSE 100, closely followed by InterContinental Hotels and engine maker Rolls-Royce. On the FTSE 250, cruise operator Carnival and travel firm Tui racked up healthy gains.

Pets at Home advanced as it upgraded its full-year profit expectations following "continued growth momentum" in the third quarter. It now expects FY22 group underlying pre-tax profit to be at least £140m, compared to analyst expectations of £134m to £137m.

Online trading platform CMC Markets was also in the black after it backed its full-year guidance as it said its performance in the third quarter was in line with expectations.

On the downside, gambling software maker Playtech fell after it again urged shareholders to accept a £2.7bn takeover offer from Australia’s Aristocrat Leisure following reports that it is planning a breakup and sale of the group if the bid is blocked by a bloc of Asia-based investors. Sky News reported that Playtech's directors and its investment banking advisers are discussing dismantling the group, citing unnamed sources.

Precious metals miner Fresnillo tumbled as it cut its production guidance, citing operational challenges and new labour laws.

Market Movers

FTSE 100 (UKX) 7,462.83 1.24%
FTSE 250 (MCX) 21,808.81 0.75%
techMARK (TASX) 4,398.13 1.06%

FTSE 100 - Risers

International Consolidated Airlines Group SA (CDI) (IAG) 152.98p 3.39%
Shell 'A' (RDSA) 1,861.20p 2.78%
Shell 'B' (RDSB) 1,862.00p 2.76%
InterContinental Hotels Group (IHG) 4,836.00p 2.57%
Rolls-Royce Holdings (RR.) 118.80p 2.56%
Glencore (GLEN) 398.65p 2.49%
Aveva Group (AVV) 2,816.00p 2.40%
Halma (HLMA) 2,464.00p 2.28%
Antofagasta (ANTO) 1,410.00p 2.25%
BP (BP.) 388.15p 2.24%

FTSE 100 - Fallers

Fresnillo (FRES) 719.20p -10.66%
Royal Mail (RMG) 436.20p -1.38%
Pershing Square Holdings Ltd NPV (PSH) 2,630.00p -0.75%
Bunzl (BNZL) 2,705.00p -0.59%
Schroders (SDR) 3,321.00p -0.54%
Abrdn (ABDN) 238.90p -0.21%
Vodafone Group (VOD) 125.32p -0.16%
Intermediate Capital Group (ICP) 1,883.50p -0.16%
Auto Trader Group (AUTO) 635.20p -0.03%
Sage Group (SGE) 762.40p 0.00%

FTSE 250 - Risers

Petropavlovsk (POG) 15.91p 6.35%
Carnival (CCL) 1,379.60p 3.82%
TUI AG Reg Shs (DI) (TUI) 255.40p 3.82%
Cineworld Group (CINE) 41.01p 3.72%
Wood Group (John) (WG.) 240.30p 3.58%
Virgin Money UK (VMUK) 189.00p 3.45%
Crest Nicholson Holdings (CRST) 315.80p 3.07%
Capricorn Energy (CNE) 204.80p 2.91%
TP Icap Group (TCAP) 147.50p 2.86%
Pets at Home Group (PETS) 429.60p 2.78%

FTSE 250 - Fallers

Playtech (PTEC) 619.00p -3.51%
Auction Technology Group (ATG) 1,098.00p -1.08%
AVI Global Trust (AGT) 195.90p -1.06%
Hochschild Mining (HOC) 111.80p -0.97%
GCP Infrastructure Investments Ltd (GCP) 106.20p -0.75%
Contour Global (GLO) 183.60p -0.65%
TI Fluid Systems (TIFS) 238.50p -0.63%
Finsbury Growth & Income Trust (FGT) 875.00p -0.46%
Trustpilot Group (TRST) 193.80p -0.26%
Law Debenture Corp. (LWDB) 787.00p -0.25%