FTSE 100 preview: Index called lower amid June rate hike prospects

on May 19, 2016

Britain’s blue-chip index is expected to open deep in the red this morning after the minutes from the latest US Federal Reserve meeting brought the possibility of a rate hike as soon as next month back on the cards. The main event on the corporate front today are Royal Mail Group’s (LON:RMG) full-year results.

IG’s opening calls suggest that the Footsie will start the day 57 points lower at 6,109. Stocks in the US retreated last night after the Fed’s minutes showed that a June rate hike was likely if data improved.
“I think this is a short-term, kneejerk reaction,” Brad McMillan, chief investment officer at Commonwealth Financial told CNBC. “When you look at what the Fed is saying, they’re saying the economy is in pretty good shape.” Asian stocks have tracked the US lower this morning.

At home, the Footsie closed little changed yesterday, shedding 1.97 points to end the session 0.03 percent lower at 6,165.80, weighed down by miners which tracked metals prices lower. Anglo American (LON:AAL) posted the biggest drop in percentage terms, shedding 3.59 percent to close at 606.10p.
Today’s macroeconomic calendar includes the UK retail sales data for April due out at 09:30 BST. IG reports that excluding auto fuel, retail sales are expected to have climbed 0.3 percent month-on-month and 1.6 percent year-on-year, marking an improvement on the 1.6-percent monthly drop posted in March.
In corporate releases, Royal Mail is scheduled to update investors on its full-year performance, with analysts expecting lower revenue and higher pre-tax profits. Other blue-chip companies reporting today include National Grid (LON:NG), 3i Group (LON:III), Hargreaves Lansdown (LON:HL) and Merlin Entertainments (LON:MERL).
Footsie companies whose shares are going ex-dividend today include Bunzl (LON:BNZL), HSBC Holdings (LON:HSBA), Imperial Brands (LON:IMB), Intertek (LON:ITRK), Provident Financial (LON:PFG) and Royal Dutch Shell (LON:RDSA). Reuters’ calculations suggest that ex-divs would knock 17.27 points off the FTSE 100.

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