London open: Stocks steady ahead of Fed minutes
London stocks were flat in early trade on Wednesday following solid gains in the previous session, as investors eyed the latest Federal Reserve minutes.
At 0825 GMT, the FTSE 100 was steady at 7,505.26.
Richard Hunter, head of markets at Interactive Investor, said: "After a sprightly start to the New Year, investor focus switched to the more pressing issue of interest rate hike expectations.
"Rising Treasury yields in the US prompted a bout of rotation from high growth stocks, such as technology, into value, boosting financial and industrial shares.
"In particular, interest rate sensitive stocks such as the banks attracted buying interest ahead of the imminent fourth quarter reporting season. Although it is extremely unlikely that rates will rise to historical levels, there is nonetheless an improvement in sentiment given that the impending environment should improve prospects for the banks over the coming months.
"Minutes are due later from the latest Federal Reserve meeting in December, and will likely reveal the latest thinking on the need to curb stubbornly high inflation by tightening policy. As such, the current expectation is for an initial hike in March, which is part of the reason for rising yields."
In corporate news, gambling software maker Playtech was in focus after it and potential bidder JKO asked Britain’s Takeover Panel for more time for the latter to declare its intentions on any takeover offer. Playtech said it was also postponing court and shareholder meetings relating to the offer by Aristocrat Leisure, previously scheduled for January 12 to February 2.
Aristocrat is the current frontrunner to acquire Playtech after the two businesses agreed to a £2.7bn deal in October.
With little in the way of corporate news, broker notes were moving shares. Online supermarket Ocado rallied after an upgrade to ‘buy’ from ‘hold’ at Berenberg, while LSE was boosted by an upgrade to ‘buy’ from ‘neutral’ at Citi.
Plumbing and heating products distributor Ferguson was also in the black after an upgrade to ‘buy’ from ‘hold’ at Berenberg.