FTSE 100 preview: Downbeat start on the cards after Fed meeting

FTSE 100 preview: Downbeat start on the cards after Fed meeting
Written by:
Alice Young
November 9, 2018

The UK benchmark index looks set to open in the red this morning, tracking the US and Asia lower, with the Federal Reserve effectively stopping the mid-term elections rally. With the earnings season winding down, there is little happening on the corporate front today.

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Downbeat start

IG’s opening calls suggest that the Footsie will start trading 0.40 percent lower at 7,112 points this morning. In the US, shares were mostly lower last night, after the Fed kept rates unchanged, in line with expectations, while signalling that it expects ‘further gradual increases’ in the overnight rate. Asian shares have also lost ground this morning, with investors digesting the US central bank’s comments.

“The Fed meeting outcome and its statement did not produce major surprises, but it managed to reinforce views that a rate hike is coming in December and this tempered equities,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management, as quoted by Reuters. “The Fed statement came after a steep surge in equities and gave the markets an opportunity to sell into the rally.”

In the UK, the FTSE 100 rose in the previous session, adding 23.40 points to close 0.33 percent higher at 7,140.68, in the wake of the mid-term elections in the UK and with investors digesting the latest batch of corporate releases.

Friday’s agenda

Today’s macroeconomic statements include the UK gross domestic product (GDP) and trade balance for September, due out at 09:30 GMT. IG reports that the GDP is expected to have climbed 0.5 percent over the previous three months, from a 0.7-percent rise in August, while the trade deficit is expected to have narrowed to £1.1 billion. In the US, the nation’s producer price index for October is out at 13:30 GMT, to be followed by Michigan’s preliminary consumer sentiment index for November at 15:00 GMT. On the corporate front, Informa (LON:INF) has posted a 10-month trading update this morning.