London pre-open: Stocks to nudge lower as investors digest Fed minutes

Michele Maatouk Sharecast | 12 Oct, 2017 07:44 - Updated: 07:46 | | |

London Stock Exchange AIM LSE shares

London stocks were set to nudge lower at the open on Thursday as investors digested the minutes from the latest Federal Reserve meeting, which suggested that a rate hike in December is on the cards.

The FTSE 100 was called to open five points lower at 7,529.

Minutes from the Federal Open Market Committee's September meeting showed the central bank was confident that the US economy was now resilient enough to withstand an increase in interest rates before the end of the year.

“Consistent with the expectation that a gradual rise in the federal funds rate would be appropriate, many participants thought that another increase in the target range later this year was likely to be warranted if the medium-term outlook remained broadly unchanged,” the minutes read.

CMC Markets analyst Michael Hewson said: "The September minutes didn’t really add anything new to what we already knew, and recent data certainly hasn’t done anything to undermine the premise of another rate increase. Last week’s payrolls data may have been disappointing but another decline in the unemployment rate to 4.2%, as well as a sharp jump in wages pressure certainly don’t diminish the case for a rate rise by the end of the year.

"That being said it is hard to determine as to whether these numbers were skewed as a result of the US hurricane season, and while it is true that some Fed members do have concerns about low levels of inflation given yesterday’s comments from Chicago Fed President Charles Evans, it would appear that he could be in the minority with perhaps the exception of the head of the Minneapolis Fed, Neel Kashkari, which means further rate hikes beyond the end of this year is harder to gauge."

On the UK economic calendar, the Bank of England credit conditions survey is at 0930 BST.

Investors will also be mulling over the latest survey from the Royal Institute of Chartered Surveyors, which showed the UK housing market continued to lack momentum in September as demand from new buyers and sales fell again and the shift in interest rate expectations contributed caution in a slowing market.

In corporate news, subscription broadcaster, fixed line phone and broadband retailer and mobile provider Sky issued its first quarter update, reporting “strong growth” in like-for-like revenue, which rose 5% year-on-year to £3.3bn.

The company said its EBITDA was ahead 11% in the quarter at £582m, while its established business EBITDA grew 15% to £606m, excluding the firm’s investment in new business.

Just Eat has been given provisional approval by UK competition authorities to complete its acquisition of rival online food ordering website Hungryhouse, deciding that its initial concerns were unfounded.

The Competition and Markets Authority said its independent adjudicators found that, on balance, the combination of the two businesses "is unlikely to result in competition concerns", though it has called for business and the public to submit their views before giving a final decision.

Tullow Oil has acquired 90% stakes in four onshore blocks in Côte d'Ivoire, it announced on Thursday. The 250 company said Petroci - the national oil company of Côte d'Ivoire - held the remaining 10%. It said the four blocks - CI 518, CI519, CI301 and CI302 - covered 5,035 square kilometres, and are located on the coastline of Côte d'Ivoire mostly to the west of Abidjan.

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