FTSE 100 preview: Index seen lower as Fed flags rate hike

Ex-divs to weigh on Footsie

FTSE 100 preview: Index seen lower as Fed flags rate hike

The UK benchmark index looks set to open lower this morning, after the US Federal Reserve signalled that it might hike rates in December. Heavyweights going ex-dividend meanwhile are likely to weigh on the FTSE 100.

IG’s opening calls suggest that Britain’s blue-chip index will start the session 0.10 percent lower at 7,527 points.

Fed signals December rate hike

In the US, stocks closed higher following the release of the minutes from the Fed’s latest meeting, which signalled that some policymakers “thought that another increase in the target range later this year was likely to be warranted if the medium-term outlook remained broadly unchanged”. Asian shares meanwhile have tracked the US higher this morning.

“Fundamentally, the global economy is in decent shape,” Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management, told Reuters. “Financial markets will remain wary of geopolitical headlines. But barring actual military conflicts, negative responses by equities are expected to be short-lived.”

At home, the Footsie lost 4.46 points to end the session 0.06 percent lower at 7,533.81, pressured by a hefty fall in Mondi (LON:MNDI), whose shares closed 7.80 percent lower on the back of the group’s disappointing trading statement.

Today’s agenda

This Thursday’s macroeconomic calendar includes a speech by European Central Bank President Mario Draghi at 13:15 BST. On the corporate front, Sky (LON:SKY) is scheduled to update investors on its recent performance. The results will come after 21st Century Fox’s bid for the company was  referred to a six-month probe by competition authorities.

“As the acquisition drags on, Sky is continuing business as usual,” said analyst Nicholas Hyett at Hargreaves Lansdown, as quoted by Sharecast, noting that revenue growth is not as fast as it was.

Blue-chips, whose shares will be trading without the attraction of their latest dividend in today’s session, include Centrica (LON:CNA), HSBC (LON:HSBA) and Tesco (LON:TSCO). Reuters’ calculations suggest that ex-divs will knock seven points off the FTSE 100. 

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