London open: FTSE flat ahead of FOMC interest rate decision

The Federal Open Market Committee is expected to keep interest rates unchanged at 0.50% amid worries about risks stemming from the slowdown in emerging economies and falls in oil prices.

With no surprises anticipated, all eyes will be on the accompanying statement for clues on the timing of the next interest rates hike.

Last month the Fed decided to raise rates by 25 basis points, marking the first increase in almost a decade.

“Since the previous meeting in December the economic landscape has changed drastically with stock markets, oil prices and global growth forecasts all following a negative trajectory, while economic data from the States have been lacklustre,” said FXTM research analyst Lukman Otunuga.

“Fundamentally these factors should dim the prospects of future rate hikes but with ongoing discussions suggesting that the Fed made a mistake by raising US rates in the first place, it seems likely that the minutes may adopt a hawkish bias similar to December in an attempt to retain credibility and prevent further disruption in the financial markets.”

Meanwhile, oil prices reversed gains registered in Tuesday’s afternoon session. Brent crude fell 1.5% to $31.33 per barrel and West Texas Intermediate dropped 2.5% to $30.68 per barrel.

“The impact of Brent Crude’s latest tumble (with the black stuff around one dollar above the $30 per barrel threshold it has been dancing around for the past couple of weeks) and the subsequent declines seen in the oil and mining sectors is the most immediate drag on the UK index this Wednesday,” said Connor Campbell, financial analyst at Spreadex.

In economic data, a report from Nationwide showed house prices rose 4.4% year-on-year in January compared to 4.5% in December. Analysts had pencilled in a 4.7% increase for this month.

Still to come, the British Bankers’ Association publishes its report on loans for house purchases at 0930 GMT, the Mortgage Bankers Association releases its weekly US mortgage applications figures at 1200 GMT, while data on US new home sales is due at 1500 GMT and a report on US crude oil inventories will be released at 1530 GMT.

Among corporate stocks Royal Bank of Scotland declined after the bank confirmed it will make a loss for 2015 and said it will set aside £500m of PPI provisions, $2.2bn (£1.5bn) for US residential mortgage-backed securities probes, and £4.2bn into its pension fund.

Rio Tinto was in the red as it agreed to sell its Mount Pleasant thermal coal project in Australia for an initial $83m rising to $224m (£156m) plus future royalties.

Antofagasta slid as it reported a 10.6% drop in copper production for the full year to 630,300 tonnes, due to lower output at Los Pelambres and Centinela.

The Sage Group rallied after reporting a 6.6% rise in revenue for the three months to 31 December, driven by strong software subscription sales.

Market Movers

FTSE 100 (UKX) 5,917.23 0.10%
FTSE 250 (MCX) 16,222.90 0.27%
techMARK (TASX) 3,132.75 0.36%

FTSE 100 - Risers

Sage Group (SGE) 597.50p 5.29%
Aberdeen Asset Management (ADN) 241.00p 3.52%
Glencore (GLEN) 89.32p 2.55%
Fresnillo (FRES) 711.50p 2.45%
Whitbread (WTB) 3,952.00p 1.57%
Travis Perkins (TPK) 1,816.00p 1.40%
Wolseley (WOS) 3,457.00p 1.35%
Compass Group (CPG) 1,141.00p 1.33%
Schroders (SDR) 2,683.00p 1.25%
easyJet (EZJ) 1,598.00p 1.20%

FTSE 100 - Fallers

Capita (CPI) 1,139.00p -2.40%
Antofagasta (ANTO) 369.60p -2.22%
ARM Holdings (ARM) 997.00p -1.77%
Shire Plc (SHP) 4,050.00p -1.77%
Royal Bank of Scotland Group (RBS) 257.80p -1.19%
Barclays (BARC) 181.25p -0.96%
BHP Billiton (BLT) 659.40p -0.92%
Lloyds Banking Group (LLOY) 64.28p -0.70%
Kingfisher (KGF) 315.60p -0.57%
Royal Dutch Shell 'A' (RDSA) 1,414.50p -0.56%

FTSE 250 - Risers

Acacia Mining (ACA) 196.10p 3.76%
Paragon Group Of Companies (PAG) 324.90p 3.70%
Ocado Group (OCDO) 270.70p 3.20%
DFS Furniture (DFS) 324.20p 2.92%
Ophir Energy (OPHR) 91.60p 2.58%
Cineworld Group (CINE) 494.00p 2.55%
esure Group (ESUR) 242.50p 2.19%
ICAP (IAP) 459.60p 2.13%
Mitchells & Butlers (MAB) 294.00p 2.08%
Amec Foster Wheeler (AMFW) 388.60p 1.99%

FTSE 250 - Fallers

Just Eat (JE.) 393.00p -6.54%
Evraz (EVR) 61.60p -5.08%
Tritax Big Box Reit (BBOX) 128.70p -2.20%
Euromoney Institutional Investor (ERM) 875.50p -2.18%
Wizz Air Holdings (WIZZ) 1,823.00p -2.04%
Barr (A.G.) (BAG) 515.50p -1.53%
Inchcape (INCH) 722.50p -1.43%
Tullow Oil (TLW) 153.70p -1.41%
Marshalls (MSLH) 297.10p -1.30%
Zoopla Property Group (WI) (ZPLA) 206.80p -1.15%