London pre-open: Stocks seen touch higher ahead of Fed

Stocks in London were expected to open just a touch higher as investors looked ahead to a policy announcement from the Federal Reserve, after the Bank of Japan stood pat.

The FTSE 100 was called to open eight points higher than Tuesday’s close at 6,838.

CMC Markets’ Michael Hewson said: “This week’s watching and waiting game looks set to come to a conclusion later today when the US Federal Reserve monetary policy committee winds up its latest two day meeting with a decision on whether to raise interest rates for the second time in nine months.

“If the narrative of the last few weeks has been any sort of guide it is clear that the FOMC is split down the middle as to whether rates should be raised, and it is highly likely that whatever decision is arrived at there will probably be some dissent.”

The Bank of Japan kept its negative interest rate of -0.1% and its quantitative easing programme at Y80trn a year. However, it introduced a new target for long-term government bonds and said its bond-buying activity will focus on keeping borrowing costs for the government at zero.

On the data front, UK public sector net borrowing figures are at 0930 BST. In the US, the FOMC rate announcement is at 1900 BST.

On the corporate front, first-half profits at Saga were short of management's full year target but the interim dividend was upped by almost a quarter to compensate.

Trading profits of £117.6m in the six months ended 31 July were up only 2% due in part to payments for the Saga Sapphire cruise ship, while pre-tax profits rose 3.9% to £104.5m. An interim dividend of 2.7p was proposed, up 23% on last year's.

Interserve announced on Wednesday that its construction joint venture Khansaheb has been awarded an £81m contract by Middle East developer Majid Al Futtaim, to expand and upgrade the City Centre Ajman mall in the United Arab Emirates.

The London-listed firm said that under the contract, Khansaheb will more than double the size of the existing mall from 32,000 square metres to 70,000 square metres, expand a number of retails units and build a new car park, creating 2,400 new parking spaces.

Smirnoff, Guinness and Baileys producer Diageo is set to deliver a “stronger” performance for the 2017 financial year due to the strengthening of marketing, innovation and commercialisation of products, the chief executive said ahead of the shareholder meeting on Wednesday.

Sales from scotch, US spirits and expansion in India were identified as key areas for growth in the current financial year.