London pre-open: Stocks seen higher after recent losses; Fed eyed
London stocks were seen opening a little firmer on Wednesday, recouping some of the losses suffered in the last four sessions as investors await some key UK data and the Federal Reserve rate announcement.
The FTSE 100 was expected to start 15 points higher than Tuesday’s close at 5,938.
The Federal Open Market Committee is widely expected to leave rates on hold later as officials present the latest projections and rate plots for the US economy.
“Fed President Janet Yellen’s biggest problem now is trying to reorientate market expectations about not only the potential rate path for this year, but also the US economy as well,” said CMC Markets’ Michael Hewson.
“Yesterday’s US retail sales numbers for May did come in better than expected at 0.5%, but they were still lower than April’s 1.3% rise. Market expectations for a rate rise this year is currently less than 50% and yet only three weeks ago Fed officials were talking up the prospect of 2-3 rate rises by the end of this year. This now looks wildly optimistic yet the Fed will be reluctant to let the markets think that the prospect of rise isn’t possible this year, so will be keen to reset expectations, while not being wildly hawkish either at a time when the US dollar is surging and stocks are weak.”
The FOMC announcement will come after the London close, at 1900 BST, with the press conference at 1930 BST. Ahead of that, investors will eye the UK claimant count rate, average weekly earnings and the unemployment rate at 0930 BST.
UK property group Berkeley said full year pre-tax profits fell to £530m from £539.7m due to reduced ground rent sales.
The company added that uncertainty over Brexit was impacting current transaction levels with reservations over the five months to May 2016 down 20%, on reduced new launches in the run-up to the EU referendum on June 23.
Forward sales increased to £3.25bn from £2.95bn.
Aveva Group has walked away from a second round of talks with French suitor Schneider Electric and has applied for its share to resume trading after their suspension. Discussions between the FTSE 250-listed group and its larger counterpart fell apart at the end of 2015 after the due diligence process revealed that it would be much harder than expected to carve out Schneider Electric's own software assets from the rest of the company.
Reports earlier this week suggested interest in a possible buy-out had been renewed, with the intention reported in the Financial Times that the French energy giant to take a majority stake in Aveva in exchange for around £550m in cash.
Barry Nightingale was appointed as chief financial officer of The Restaurant Group on Wednesday, starting with the company and joining the board on 20 June.
The FTSE 250 firm said Nightingale is an experienced CFO, having recently held the role at Monarch Airlines as well as at leisure giant Betfred.
He has previously held senior finance roles at UK Car Group, Everything and Airtours, having qualified as a chartered accountant with Deloitte.