London pre-open: Stocks seen lower as investors digest Fed and BoJ

The FTSE 100 was seen starting 20 points lower than Wednesday’s close at 6,300.

The Fed chose to stand pat on interest rates on Wednesday evening, as widely expected, but left the door open to a June hike.

Earlier on Thursday, the Bank of Japan left its policy rate at -0.1%, but did not extend its stimulus package to include negative rate bank loans, which many had been expecting.

“Last night’s Fed meeting didn’t contain too many surprises as the FOMC committee attempted to walk the fine line between appearing too dovish or too hawkish,” said Michael Hewson, chief market analyst at CMC Markets.

“Ultimately, given some recent economic weakness they wanted to send the message to investors that a June rate rise remained on the table, as a policy option. In this they appear to have succeeded as they removed the reference to global economic and financial developments posing risks. They balanced this omission by noting that economic activity appears to have slowed.”

There are no major UK data releases due, but in the US, initial jobless claims and the first release of first-quarter GDP are at 1330 BST.

First quarter results from Lloyds Banking Group revealed a 6% fall in underlying profit to £2.05bn as a reduction in impairment charges and lower costs offset a small decline in income.

Total income fell 1% to £4.38bn after a 3% increase in net interest income was blotted by a 7% decline in other income stemming from lower insurance income and continued pressure on fees and commissions that Lloyds said was resilient in the current market conditions.

Advertising and public relations group WPP reported billings of £11.92bn in its first quarter on Thursday - an increase of 8.3%, or 6.7% at constant currencies.

The FTSE 100 firm said revenue in the four currencies it reports in went up 10.5% to £3.08bn, 4.6% to $4.40bn, 6.3% to €3.99bn, and 0.9% JPY 506.61bn.

WPP’s board said first quarter revenue, net sales and profit was “well above budget and ahead of last year.”

Its constant currency net debt also grew, and was £701m higher on 31 March this year than it was on the same date in 2015. Average net debt in the first quarter was up by £767m over the same period a year earlier.

The prospect of a British exit from the EU had not affected trading at house builder Taylor Wimpey in the first four months of the year, the company said on Thursday, adding that underlying demand was “solid” across all the countries it operated in.

“Due to our customer base and supply chain being based principally in the UK, together with our strong order book, we are well equipped to react to any potential changes in the market that may be caused by the EU referendum,” Taylor said in a trading statement.

“The UK housing market continues to be underpinned by good mortgage availability and employment prospects. As at 24 April 2016 we are around 70% forward sold for 2016 private completions, positioning us well for the remainder of the year and beyond. As expected, the rate of build cost inflation has reduced, and we continue to anticipate underlying build cost increases of 3-4% in 2016.”

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