London pre-open: Stocks to edge lower after Fed announcement, ahead of BoE
London stocks were set to edge lower at the open on Thursday as investors mulled the latest policy announcement from the Federal Reserve and looked ahead to a policy decision from the Bank of England and the release of UK retail sales data.
The FTSE 100 was called to open 13 points lower at 7,301.
CMC Markets analyst Michael Hewson said the Fed did what the markets expected and cut rates by 25 basis points to 1.75%-2%, although the decision was not unanimous "and President Trump had his obligatory twitter tantrum", criticising the Fed for having ‘no guts, no sense and no vision’.
"Dissents came from the hawkish as well as the dovish side with both Esther George of the Kansas City Fed and the Boston Fed’s Eric Rosengren pushing back against the cut, like they did in July, while James Bullard of the St. Louis Fed argued for a deeper move of 50bp.
"Against these types of disagreements, Jay Powell’s press conference was always likely to be a tricky one, after all with the FOMC so split how could he give a solid steer on how future Fed policy was likely to play out over the course of the rest of the year.
"All in all, Powell managed to navigate his way through the press conference without any pratfalls to speak of, with stock markets finishing the day higher and US treasury yields more or less finishing the day where they started."
As far as the BoE is concerned, no change to monetary policy is expected ahead of the 31 October Brexit deadline. The main focus will be on how the central bank sees the UK economy evolving over the next few months, Hewson said.
On the data front, UK retail sales figures for August are due out at 0930 BST.
In corporate news, sugar and sweeteners group Tate & Lyle said it had agreed a £930m bulk annuity insurance 'buy-in' with Legal & General.
The de-risking of the scheme means the company will save £20m in annual contributions, said Tate & Lyle chief financial officer Imran Nawaz.
Diageo's chief executive said the company has begun its new financial year well as he doubled down on expectations for 4-6% organic net sales growth, with organic operating profit growth seen as beating net sales growth by a further 1%.
However, he also warned that the company would not be immune to shifting global trade conditions, adding that it is closely monitoring changes.
Footwear and sports apparel retailer JD Sports Fashion updated the market on its acquisition of Footasylum following the Competition and Markets Authority's (CMA) decision that it intends to refer its review to phase 2.
The company’s executive chairman Peter Cowgill said the company continued to believe that Footasylum would be a “positive addition” to the group, bringing a “differentiated customer demographic” and fashion-led product range that was complementary to its existing business. “We also believe that there will be significant operational and strategic benefits from a combination of the two businesses,” he added.