London pre-open: Stocks seen steady ahead of US rate announcement
By Michele Maatouk
Date: Wednesday 04 May 2022
(Sharecast News) - London stocks were set for a steady open on Wednesday as investors eye the latest policy announcement from the US Federal Reserve.
The FTSE 100 was called to open unchanged at 7,561.
CMC Markets analyst Michael Hewson said: "Today's Federal Reserve rate decision should be of no surprise to most people with a 50bps rate rise expected, which should take the upper bound of the Fed Funds rate to 1%.
"This is the least of market expectations, when it comes to what the Fed may well announce today, with an outside chance we might get some members push for a 75bps hike.
"The biggest question will be around the pace of its balance sheet reduction program along with the pace of subsequent rate hikes, with the potential for another 50bps hike to come in June.
"Powell's comments at the IMF, that the Fed could well go much harder, and a lot quicker on rate hikes has prompted concern that the Fed may well overplay its hand at a time when the global economy looks set for a sustained slowdown, as China continues to lose its battle with Covid.
"While markets will be looking for clues as to how many more 50bps rate rises could well be on the way, a look at the dot plots, as well as the Fed's inflation forecasts should offer some clues here.
"We'll also have an eye on the topic of balance sheet reduction, with the potential that we could get an announcement today, especially given that there appeared to be general agreement from what we gleaned from the most recent Fed minutes that we could see $95bn a month, $60bn of that being in treasuries, and $35bn in mortgage-backed securities."
In corporate news, luxury car maker Aston Martin Lagonda reported a rise in adjusted core earnings on Wednesday amid strong retail demand and announced the appointment of former Ferrari boss Amedeo Felisa as chief executive.
The company said adjusted EBITDA increased for the three months to March 31 18% to £24.4m. Losses before tax widened to £111m from £42.2m.
Bookmaker Flutter Entertainment saw group revenues grow in the three months ended 31 March as the number of average monthly players rose by 15% to 8.85m.
Flutter said total revenues had grown 5% year-on-year to £1.56bn, with sports revenue growing 4% to £930.0m and gaming revenues up 8% to £636.0m.
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