FTSE 100 preview: Index seen steady ahead of Fed rate decision

on Jul 31, 2019
Updated: Apr 28, 2020

The FTSE 100 looks set to open marginally higher this morning, ahead of a highly-anticipated decision by the US Federal Reserve later today. Investors have a lot of corporate releases to look out for this morning, including an update by bailed-out Lloyds Banking Group (LON:LLOY).

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FTSE 100 seen steady

IG’s opening calls suggest that the Footsie will start trading 0.13 percent higher at 7,656 points. In the US, shares fell last night amid worries over Washington’s relations with China, and with investors staying on the sidelines ahead of the Fed meeting outcome.

“Considering the strength of the U.S. economy and the Federal Reserve set to lower interest rates, we are witnessing a rotation from the defensive sectors of the market to the aggressive cyclical areas that are more closely tied to a growing economy and would benefit from economic stimulus,” Bruce Bittles, chief investment strategist at Baird, said in a note, as quoted by CNBC.

In the UK, the FTSE 100 gave up some of Monday’s gains, shedding 39.84 points to end trading 0.52 percent lower at 7,646.77, pressured partly by a hefty fall in Centrica (LON:CNA), whose shares lost nearly a fifth of their value in single day as the British Gas owner slashed its dividend.

Wednesday’s releases

Today’s macroeconomic calendar includes Germany’s unemployment data for July at 08:55 BST, to be followed by flash gross domestic product data for the eurozone at 10:00 BST. In the US, the ADP employment report for July is out at 13:15 BST, and the Chicago purchasing managers’ index for July at 14:45 BST. The Fed rate decision will be announced at 19:00 BST, after the UK market closes.

On the corporate front, Lloyds is the first FTSE 100 lender to post results this earnings season. IG reports that the bailed-out lender is expected to report pre-tax profit of £4.3 billion, up from £3.1 billion a year earlier, while revenue is expected to have climbed to £9.4 billion.

Other FTSE 100 companies reporting today include BAE Systems (LON:BA), Just Eat (LON:JE), which agreed a merger deal in principle with Takeaway.com earlier in the week, as well as St James’s Place (LON:STJ), Taylor Wimpey (LON:TW), Rentokil Initial (LON:RTO), Smith & Nephew (LON:SN), Next (LON:NXT) and Direct Line (LON:DLG).

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