London pre-open: Stocks seen muted ahead of UK jobs data, Fed

London stocks were set for a muted open on Wednesday ahead of some key UK jobs data and the latest policy announcement from the Federal Reserve.

The FTSE 100 was expected to open unchanged at 7,500.

The ILO unemployment rate is at 0930 BST, along with the claimant count and average earnings. Meanwhile, the FOMC rate decision is at 1900 BST, with a 25 basis points rate hike largely priced in.

CMC Markets analyst Michael Hewson said: "The last two quarters have been a negative contributor to GDP and unless wages start to pick up and keep track of the rise in prices then it is unlikely that we’ll get to see a recovery in spending soon, though input prices would appear to suggest that inflationary pressures may be plateauing in the short term.

"In this context today’s wages data for April could not be more important given that they have been in decline for the last five months. In March, weekly wages showed a gain of 2.1%, and it is expected that this decline may well continue with a drop to 2% expected. If we get an upside surprise that might raise expectations that wages have bottomed out and that the labour market has started to tighten, at a time when the unemployment rate is at a 20 year low, at 4.6%. This rate is expected to remain unchanged in April."

On the political front, Prime Minister Theresa May was expected to announce a pact with Northern Ireland's Democratic Unionist Party later on Wednesday amid reports that former PM David Cameron said there would be pressure on May to opt for a softer exit from the EU.

May confirmed on Tuesday that Brexit negotiations will begin as scheduled next week.

In corporate news, sales growth at WH Smith remained almost unchanged in the third quarter, with the retailer's profits margins said to be improving.

For the 15 weeks to 10 June, the group reported total sales up 2% compared to the same period last year and flat like-for-like sales, as it had for the first half of the year.

British American Tobacco posted a pre-close trading update for its first half, with the board saying the business continued to perform “very well”, in line with expectations.

The company said first half revenue was expected to benefit from “good pricing”, with first half volumes lapping a strong prior year comparator and impacted by the phasing of shipments in a number of key markets, including Pakistan.

Full year volume was expected to outperform the industry, which BAT’s board anticipated would be down around 4%.