London open: Stocks edge lower ahead of Fed policy announcement

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

At 0850 GMT, the FTSE 100 was down 0.3% at 6,783.34.

Spreadex analyst Connor Campbell said: "After some vaccine heat at the start of the week, investors can get back to their other recent preoccupation - bond yields, interest rates and rising inflation.

"The spotlight is going to be put on the issue by this evening’s Federal Reserve meeting, and Thursday’s Bank of England chaser.

"Though the BoE’s Andrew Bailey and Andy Haldane have expressed concern over rising inflation - the latter talking of ‘taming’ the inflationary tiger - the Fed’s Jerome Powell has been slightly more sanguine. Much to the displeasure of investors. Continued reluctance to view the movement in yields with the same concern as equities investors could create a problem for the markets heading into the end of the week.

"Wednesday night will also see a round of new economic projections - the first since the success of Joe Biden’s American Rescue Plan. And if, as expected, the US economy is facing a stronger recovery than first thought, questions will turn to the timing of the Fed’s next interest rate rise, which is currently forecast in 2024 at the earliest."

In equity markets, BT and Vodafone were among the top performers after the UK government auctioned a new tranche of 5G mobile network spectrum for £1.36bn. EE, owned by BT, paid a total of £452m after it won 2x10 MHz of paired frequency spectrum in 700 MHz band for £280m, 20 MHz of supplementary downlink spectrum in 700 MHz band for £4m and 40 MHz in 3.6-3.8 GHz band for £168m.

Meanwhile, Vodafone secured 40 MHz in 3.6-3.8 GHz for £176.4m in the auction run by regulator Ofcom.

Engine maker Rolls-Royce was a high riser after an upgrade to ‘neutral’ from ‘underweight’ by JPMorgan Cazenove.

Investment platform Hargreaves Lansdown rallied as it predicted pre-tax profit for the year to the end of June would be "modestly above" the top of analyst expectations after strong dealing volumes continued from the end of January.

Outsourcer Capita gained after announcing it was simplifying its business into three divisions from six, as it posted a decline in full-year pre-tax profit after taking a hit from the pandemic.

On the downside, shopping centre owner Hammerson slumped, having risen sharply a day earlier after saying it was looking to convert a former flagship Debenhams in Leicester into housing.

Upper Crust owner SSP fell after saying it was looking to raise £475m via a rights issue as it anticipated slower recovery from the impact of the pandemic on the travel industry.

TI Fluid Systems was knocked lower by a downgrade at Deutsche Bank, while Trainline was weaker after a downgrade at Panmure.

Market Movers

FTSE 100 (UKX) 6,783.34 -0.30%
FTSE 250 (MCX) 21,598.87 -0.76%
techMARK (TASX) 4,213.49 -0.63%

FTSE 100 - Risers

BT Group (BT.A) 148.50p 3.70%
Rolls-Royce Holdings (RR.) 125.50p 2.16%
Relx plc (REL) 1,775.50p 1.98%
Intertek Group (ITRK) 5,578.00p 1.97%
Vodafone Group (VOD) 136.74p 1.65%
Hargreaves Lansdown (HL.) 1,575.00p 1.65%
Standard Chartered (STAN) 496.40p 1.04%
Tesco (TSCO) 227.70p 0.62%
Ferguson (FERG) 9,118.00p 0.57%
Rightmove (RMV) 575.20p 0.31%

FTSE 100 - Fallers

Anglo American (AAL) 2,951.50p -1.88%
Land Securities Group (LAND) 693.10p -1.80%
Evraz (EVR) 551.80p -1.78%
British Land Company (BLND) 522.60p -1.77%
Compass Group (CPG) 1,569.00p -1.66%
Fresnillo (FRES) 951.20p -1.61%
Barratt Developments (BDEV) 759.00p -1.43%
Berkeley Group Holdings (The) (BKG) 4,394.00p -1.39%
Melrose Industries (MRO) 179.60p -1.32%
Pearson (PSON) 802.60p -1.30%

FTSE 250 - Risers

Capita (CPI) 48.69p 5.44%
Serco Group (SRP) 139.30p 1.38%
Hilton Food Group (HFG) 1,064.00p 1.33%
AJ Bell (AJB) 424.50p 1.31%
easyJet (EZJ) 1,044.50p 1.21%
Herald Investment Trust (HRI) 2,140.00p 1.18%
JTC (JTC) 618.00p 0.65%
CLS Holdings (CLI) 233.00p 0.65%
NextEnergy Solar Fund Limited Red (NESF) 98.80p 0.61%
Future (FUTR) 1,818.00p 0.55%

FTSE 250 - Fallers

Hammerson (HMSO) 38.59p -7.46%
TI Fluid Systems (TIFS) 268.00p -5.35%
Just Group (JUST) 94.95p -4.95%
SSP Group (SSPG) 331.40p -4.16%
Computacenter (CCC) 2,272.00p -2.99%
Trainline (TRN) 487.40p -2.91%
TP Icap Group (TCAP) 247.65p -2.86%
BMO Commercial Property Trust Limited (BCPT) 72.50p -2.55%
Crest Nicholson Holdings (CRST) 389.20p -2.46%
Vistry Group (VTY) 1,044.00p -2.43%