London pre-open: Stocks to edge up as investors eye Fed announcement

London stocks were set to edge higher at the open on Wednesday as investors eyed the latest policy announcement from the US Federal Reserve.

The FTSE 100 was called to open seven points higher at 7,673.

CMC Markets analyst Michael Hewson said: "As we look towards today’s European market open the focus today will be on the spillover effects of last night’s quarterly earnings numbers from Microsoft and Alphabet, as well as the latest inflation numbers from France and Germany and today’s Fed rate decision."

On home shores, figures from Nationwide showed that house prices rose in January as mortgage rates fell.

House prices were up 0.7% on the month, having been flat in December. On the year, meanwhile, prices were down just 0.2% in January following a 1.8% decline the month before. This marked the strongest outturn since January 2023.

Nationwide chief economist Robert Gardner said: "There have been some encouraging signs for potential buyers recently with mortgage rates continuing to trend down. This follows a shift in view amongst investors around the future path of Bank Rate, with investors becoming more optimistic that the Bank of England will lower rates in the years ahead.

"These shifts are important as this led to a decline in the longer-term interest rates (swap rates) that underpin mortgage pricing around the turn of the year. However, the partial reversal in recent weeks in response to stronger than expected inflation and activity data cautions that the interest rate outlook remains highly uncertain."

In corporate news, professional IT services provider FDM Group said it expected annual revenues to be flat, confirming the warning it issued in November about the hit from geopolitical uncertainties and clients deferring project decisions.

Revenue for calendar 2023 is expected to rise by 1% to £334m as client placements plunged by 21% and FDM was forced to axe a tenth of its internal workforce.

"The last nine months of 2023 saw difficult trading conditions across our markets, with many clients delaying and deferring decisions around projects and consultant placements given the macro-economic and geo-political uncertainties they faced,” said chief executive Rod Flavell.

“Levels of client engagement remain encouraging and the early signs of returning client confidence which we reported in November continue.”

De Beers, the diamond division of mining giant Anglo American, has reported encouraging further signs of stabilisation in the diamond market after a big jump in revenues from its first sales tender of the new financial year.

The company said it sold $370m of rough diamonds in the cycle one tender, down from $454m in same cycle one tender last year but well ahead of the $137m sold in the last sales cycle of 2023.

Al Cook, De Beers chief executive, said: "Solid consumer demand for diamonds in the United States over the year-end holiday season has certainly helped to stabilise the industry and we are seeing polished diamond prices increasing again."

Sales have been falling sharply since the spring of 2023, down to a low of $80m in cycle nine (November), compared with $540m in cycle three (April).