London pre-open: Stocks seen up ahead of Fed announcement

London stocks were set to edge up at the open on Wednesday as investors eyed the latest policy announcement from the US Federal Reserve.

The FTSE 100 was called to open 17 points higher at 7,204.

CMC Markets analyst Michael Hewson said: "Equity markets continue to look vulnerable to further losses, as do bond markets, after yields ripped higher again yesterday.

"European markets underwent another negative session, as did US markets, falling for the fifth day in a row, ahead of today’s FOMC rate decision, where the central bank needs to wrestle back control of a narrative, that appears to be running out of control, with the US 2 year yield up over 80bps this month alone, with 50bps of that rise in the last three days.

"The volatility since last Friday looks set to manifest itself into a slightly firmer European open later this morning, after Chinese economic data came in slightly better than expected."

The Fed rate announcement is due after the European close, at 1900 BST.

Hewson said: "Up until a week ago it was pretty much a slam dunk that the Fed would be raising rates today by another 50bps to 1.5%, to be followed by another 50bps in July.

"This calculus has shifted quite sharply since last Friday’s May CPI report to the markets pricing 75bps because of a single CPI print of 8.6%, over concerns that the Federal Reserve is falling behind the curve when it comes to addressing sticky inflation expectations."

In corporate news, WH Smith said it expected annual results to be at the upper end of expectations as it reported a surge in revenue over pre-Covid pandemic levels for the first time, driven by a recovery in the travel market.

The newsagent, which runs stores on the high street as well as train stations and airports, said sales in the 15 weeks to June 11 were up 107% on the same period in 2019.

Mining giant Rio Tinto said it had delivered first ore at its Gudai-Darri greenfield mine in Western Australia's Pilbara region.

Rio Tinto said the first lot of autonomous AutoHaul trains were loaded with ore from Gudai-Darri's process plant before travelling a new 166-kilometre rail line that connects to the group's existing rail and port infrastructure.