London open: Stocks flat as investors mull hawkish Fed hike, BoE eyed

Stocks in London were little changed in early trade as investors digested a 25 basis points rate hike by the Federal Reserve, as anticipated, but a more hawkish tone than expected.

At 0830 GMT, the FTSE was down just 0.1% to 6,940.20. Meanwhile, oil prices were fairly steady, with West Texas Intermediate down 0.2% to $50.94 a barrel and Brent crude up 0.2% to $54.00.

On Wednesday, the Fed raised the range of its main policy rate to between 0.50% and 0.75% and signalled that more interest rate increases were on the cards for next year than it had at the meeting in September. Rate-setters in Washington DC were unanimous in their decision to tighten policy.

According to the newly-submitted 'dot-plot' graphs of interest rates projections from the Federal Reserve's board members and regional Fed presidents, the median expectation is for three quarter-point interest rate hikes in the following year, up from two previously.

A further three hikes were projected in 2018, followed by another three in 2019.

Spreadex’s Connor Campbell said: “Raising rates by the expected 0.25%, marking only the second hike in a decade, Janet Yellen struck a hawkish tone on Wednesday despite warning of a ‘cloud of uncertainty’ that will only disperse once Donald Trump has outlined his intentions more fully.

“The Fed chair also got a subtle dig in at one of the President-elect’s most discussed policies, hinting that the proposed infrastructure spend may make little difference to the country’s fairly healthy labour market. Arguably the most important news market-wise is that the central bank now expects three, not the previously stated two, rate hikes in 2017 – likely to combat the incoming Trumpflation – a revision that sent the dollar index to a 14-year high.”

Investors in the UK were also looking ahead to the Bank of England rate announcement at 1200 GMT amid expectations the bank rate will be kept at a historical low of 0.25% and the asset purchases target will be unchanged at £435bn.

In corporate news, British Gas owner Centrica pushed up after lifting its earnings outlook for the full-year.

Just Eat gained ground after announcing the acquisition of UK rival Hungryhouse and Canada’s SkipTheDishes.

GVC Holdings rallied as the FTSE 250 sports betting and gaming group said it expects pro-forma net gaming revenue for the year to the end of December and adjusted earnings to be at the upper end of forecasts.

Distribution and outsourcing company Bunzl nudged lower despite saying it expects revenue to increase for the year mainly due to several acquisitions and after slow growth in the first three quarters.

Royal Dutch Shell edged up as it said chief financial officer Simon Henry will retire after more than seven years in the role, to be succeeded by Jessica Uhl, who will take on the job with effect from 9 March.

Transport operator Go-Ahead Group slipped after saying its rail business is likely to miss expectations following the Southern Rail strikes.

Tate & Lyle was in the red as it appointed Gerry Murphy as chairman designate with effect from 1 April, when Peter Gershon retires.

JD Sports was on the back foot as it hit back at a Channel 4 News report on working conditions at its Rochdale warehouse.

Oilfield services provider Petrofac gushed lower after saying it expects profit for the year to be in line with guidance but slightly below last year.

PZ Cussons ticked lower as the consumer goods group said it was had traded in line with its expectations in the first half of the year.

Market Movers

FTSE 100 (UKX) 6,940.20 -0.13%
FTSE 250 (MCX) 17,641.85 -0.23%
techMARK (TASX) 3,296.69 -0.02%

FTSE 100 - Risers

Centrica (CNA) 224.10p 2.38%
Barclays (BARC) 226.55p 2.16%
Royal Bank of Scotland Group (RBS) 221.40p 1.84%
Lloyds Banking Group (LLOY) 63.66p 1.43%
Carnival (CCL) 4,100.00p 1.36%
AstraZeneca (AZN) 4,352.50p 1.10%
Standard Life (SL.) 364.40p 1.05%
Legal & General Group (LGEN) 240.60p 1.05%
International Consolidated Airlines Group SA (CDI) (IAG) 438.20p 0.99%
Direct Line Insurance Group (DLG) 351.80p 0.95%

FTSE 100 - Fallers

Fresnillo (FRES) 1,082.00p -8.31%
Randgold Resources Ltd. (RRS) 5,555.00p -6.48%
Polymetal International (POLY) 780.50p -3.10%
United Utilities Group (UU.) 866.00p -2.91%
Mediclinic International (MDC) 727.50p -2.28%
BHP Billiton (BLT) 1,328.50p -1.99%
Anglo American (AAL) 1,179.00p -1.95%
National Grid (NG.) 905.00p -1.85%
Old Mutual (OML) 189.80p -1.81%
Hikma Pharmaceuticals (HIK) 1,699.00p -1.74%

FTSE 250 - Risers

GVC Holdings (GVC) 645.50p 4.96%
Aggreko (AGK) 917.50p 4.68%
CYBG (CYBG) 278.50p 2.77%
Just Eat (JE.) 610.50p 2.18%
Barr (A.G.) (BAG) 494.00p 1.86%
SSP Group (SSPG) 386.10p 1.61%
WH Smith (SMWH) 1,469.00p 1.52%
Playtech (PTEC) 777.50p 1.37%
Rentokil Initial (RTO) 208.50p 1.21%
esure Group (ESUR) 196.80p 1.18%

FTSE 250 - Fallers

Hochschild Mining (HOC) 229.90p -5.39%
Acacia Mining (ACA) 378.00p -4.88%
Centamin (DI) (CEY) 124.60p -4.52%
Marston's (MARS) 133.90p -3.88%
Brown (N.) Group (BWNG) 203.10p -3.42%
Inmarsat (ISAT) 712.00p -3.20%
Mitie Group (MTO) 211.70p -2.85%
Kaz Minerals (KAZ) 382.40p -2.52%
Petrofac Ltd. (PFC) 889.00p -2.31%
Petra Diamonds Ltd.(DI) (PDL) 154.50p -2.22%