The FTSE 100 looks set to start today’s session on the back foot, after the US Federal Reserve moved to hike rates last night, and amid investor caution ahead of the European Central Bank (ECB) policy decision later today. In company news, Reuters reports that the Financial Conduct Authority expects to complete its enforcement investigation into alleged mistreatment by Royal Bank of Scotland Group (LON:RBS) of small business customers by the end of next month.
Fed rate hike to weigh on index
IG's opening calls suggest that the Footsie will start today's session 0.42 percent lower at 7,671 points. The blue-chip index is likely to take cues from the US, where shares moved lower last night after the Fed moved to hike rates and signalled that there could be two more increases this year. Asian shares meanwhile have tracked the US lower this morning.
“The Fed was slightly more hawkish. But at the same time, the Fed is raising rates because of a strong economy and not because of the need to contain inflation. So that might have helped curb market reactions,” said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui Asset Management, as quoted by Reuters.
In the UK, the FTSE 100 lost 0.10 points yesterday to close at 7,703.71, flat in percentage terms, pressured by investor caution ahead of the Fed decision.
Thursday’s macroeconomic releases include UK retail sales data for May, due out at 09:30 BST. IG reports that sales are expected to have climbed 1.8 percent last month, from 1.4 percent year-on-year, and 0.2 percent, from 1.6 percent month-on-month. The ECB rate decision will be announced at 12:45 BST, to be followed by the usual press conference at 13:30 BST. In the US, the nation’s retail sales numbers for May are due out at 13:30 BST.
FTSE 100 companies, whose shares will be trading without the attraction of their latest dividend in today’s session, include 3i Group (LON:III), Mediclinic (LON:MDC), NMC Health (LON:NMC), Persimmon (LON:PSN), Severn Trent (LON:SVT) and WPP (LON:WPP). Reuters’ calculations suggest that ex-divs will knock 4.5 points off the blue-chip index.