London pre-open: Stocks seen down ahead of Fed; UK GDP in focus

London stocks were set to edge down at the open on Wednesday as investors eyed a policy announcement from the US Federal Reserve, and digested the latest UK GDP reading.

The FTSE 100 was called to open 10 points lower at 7,585.

CMC Markets analyst Michael Hewson said: "Having seen US CPI for May come in at a two year low of 4%, in numbers released yesterday, market expectations are for the US central bank to take a pause today with a view to looking at a hike in July.

"Of course, this will be predicated on how the economic data plays out over the next 6-7 weeks but nonetheless the idea that you would commit to a hike in July begs the question why not hike now and keep your options open regarding July, ensuring that financial conditions don’t loosen too much."

On home shores, figures from the Office for National Statistics showed the economy returned to growth in April.

Gross domestic product rose 0.2%, in line with expectations, following a 0.3% contraction in March.

The services sector was the main contributor, growing by 0.3% in April after shrinking 0.5% the month before.

In the three months to April, the economy grew by just 0.1%.

Darren Morgan, director of economic statistics at the ONS, said: "GDP (gross domestic product) bounced back after a weak March.

"Bars and pubs had a comparatively strong April while car sales rebounded and education partially recovered from the effect of the previous month's strikes.

"These were partially offset by falls in health, which was affected by the junior doctors' strikes, along with falls in computer manufacturing and the often-erratic pharmaceuticals industry.

"Housebuilders and estate agents also had a poor month.

"Over the last three months as a whole the economy grew a little, driven largely by the construction industries.

"The services sector dragged growth downwards, partly due to the impact of public sector strikes."

In corporate news, Games Workshop said it expected to post increased annual profit of at least £170m, up from £157m a year ago, driven by a strong rise in revenue and licensing income.

In a year-end trading update, the maker of Warhammer said core revenue for the 52 weeks to May would be not less than £440m, up from £387m.

Licensing income was forecast to fall to £25m from £28m.

A trading update from Shaftesbury and results from Safestore were also in focus.