London open: Stocks gain as FOMC keeps rates unchanged

UK stocks advanced on Thursday after the US Federal Reserve decided to keep interest rates unchanged and struck a more cautious note on its outlook for the global economy.

The Federal Open Market Committee voted unanimously to maintain rates at 0.50%, as expected by analysts, amid concerns on a global economic slowdown.

In the Fed’s accompanying statement, it said it was closely monitoring global economic and financial developments, providing little indication on when it might next raise rates.

"Inflation is expected to remain low in the near term," The Fed said.

Yet the Fed said it expects the economy to continue to grow "at a moderate pace”, supported by a strong labour market.

“Although the Fed decided to be mindful in the statement by reiterating a similar language to December in an attempt to mitigate further turmoil in the financial markets, critical changes highlighting slowing economic growth and low inflation levels have made the idea a US rate increase in March difficult to imagine," said FXTM research analyst Lukman Otunuga.

Last month, the Fed raised benchmark interest rates by 25 basis points to 0.50%, marking the first hike in nearly a decade.

The attention now turns to UK gross domestic product figures at 0930 GMT which are expected to show the economy slowed in the fourth quarter. Analysts expect GDP grew 1.9% in the fourth quarter compared to a year ago, easing back from the 2.1% increase recorded in the third quarter. However, on a quarter-on-quarter comparison, GDP is projected to rise 0.5% in the final three months of the year, up from 0.4% in quarter three.

Thursday’s economic calendar also including the release of reports on German inflation at 1300 GMT, US initial jobless claims at 1330 GMT, US durable goods orders at 1330 GMT and US pending home sales at 1500 GMT.

Meanwhile, oil prices continued to sway from ups and downs. At 0903 GMT Brent crude was up 0.6% to $33.30 per barrel and West Texas Intermediate grew 0.3% to $32.41per barrel.

The pick-up in oil prices gave stocks in the industry a boost including Royal Dutch Shell, Tullow Oil and Petrofac.

Among other corporate stocks, Diageo’s shares fell after the drinks company posted a drop in revenue in the first half.

FirstGroup tumbled after the transport operator lowered its operating profit guidance for the current financial year amid a challenging trading environment.

Mitchells & Butlers gained after the pub company reported strong Christmas and New Year sales limited the damage to its sales figures for the nine weeks to 23 January.

Market Movers

FTSE 100 (UKX) 6,001.71 0.19%
FTSE 250 (MCX) 16,297.34 0.10%
techMARK (TASX) 3,141.90 -0.38%

FTSE 100 - Risers

Anglo American (AAL) 268.00p 5.62%
Glencore (GLEN) 94.11p 2.26%
Standard Chartered (STAN) 481.65p 2.19%
Antofagasta (ANTO) 383.50p 2.16%
Royal Dutch Shell 'A' (RDSA) 1,489.00p 1.78%
Royal Dutch Shell 'B' (RDSB) 1,487.00p 1.71%
Old Mutual (OML) 162.40p 1.69%
HSBC Holdings (HSBA) 487.65p 1.57%
Fresnillo (FRES) 717.50p 1.56%
Randgold Resources Ltd. (RRS) 4,880.00p 1.35%

FTSE 100 - Fallers

Ashtead Group (AHT) 900.50p -6.68%
Centrica (CNA) 204.30p -2.76%
Shire Plc (SHP) 3,976.00p -1.83%
Carnival (CCL) 3,559.00p -1.58%
Hikma Pharmaceuticals (HIK) 1,963.00p -1.55%
easyJet (EZJ) 1,550.00p -1.46%
Aberdeen Asset Management (ADN) 236.80p -1.33%
Vodafone Group (VOD) 220.55p -1.19%
International Consolidated Airlines Group SA (CDI) (IAG) 546.00p -1.18%
Intertek Group (ITRK) 2,732.00p -1.12%

FTSE 250 - Risers

Tullow Oil (TLW) 159.70p 4.45%
Allied Minds (ALM) 298.00p 3.87%
Vedanta Resources (VED) 221.10p 3.61%
Wood Group (John) (WG.) 619.50p 2.82%
Acacia Mining (ACA) 199.20p 2.63%
Drax Group (DRX) 240.40p 2.47%
Mitchells & Butlers (MAB) 290.20p 2.40%
Petrofac Ltd. (PFC) 766.00p 2.13%
Fidessa Group (FDSA) 1,920.00p 1.86%
Kier Group (KIE) 1,239.00p 1.81%

FTSE 250 - Fallers

Melrose Industries (MRO) 283.30p -85.30%
FirstGroup (FGP) 97.25p -4.94%
Renishaw (RSW) 1,709.00p -4.20%
PayPoint (PAY) 800.00p -3.61%
Riverstone Energy Limited (RSE) 728.00p -2.93%
Go-Ahead Group (GOG) 2,450.00p -2.93%
TalkTalk Telecom Group (TALK) 212.40p -1.62%
Rathbone Brothers (RAT) 2,319.00p -1.57%
Pennon Group (PNN) 875.00p -1.46%
IG Group Holdings (IGG) 723.00p -1.23%