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London open: Stocks gain as Fed stands pat
Stocks in London rose in early trade, taking their cue from positive sessions in the US and Asia after the Federal Reserve stood pat on rates but suggested a hike would come later this year.
At 0820 BST, the FTSE 100 was up 0.6% to 6,872.23.
Meanwhile, oil prices advanced, with West Texas Intermediate up 1.1% to $45.83 a barrel and Brent crude 1% firmer at $47.30.
On Wednesday the Fed kept interest rates unchanged at between 0.25% and 0.50%, with three members dissenting in favour of an immediate 25 basis points hike. The central bank said the case for a rate increase has strengthened, leaving the door open to a move by the end of the year.
The Federal Open Market Committee said: “The Committee judges that the case for an increase in the federal funds rate has strengthened, but decided, for the time being, to wait for further evidence of continued progress toward its objectives.”
CMC Markets‘ Michael Hewson said: “There had been an expectation that whichever way the Fed went on the decision that it wouldn’t be unanimous, but it would appear for now that the dovish camp has won out on this occasion, however a December rise remains very much on the table, in an almost identical replay of last year, when the Fed also baulked in September only to subsequently act in December.”
In corporate news, Micro Focus International was in the black after confirming its full-year guidance, while Kier Group rallied after its full-year numbers met analysts’ expectations.
Pub group Mitchells & Butlers gained ground after it reported a drop in full year sales but a rise in the most recent eight weeks of trading, as it reiterated that full-year margins will be below the previous year.
Rolls Royce was on the back foot after it appointed Stephen Daintith of the Daily Mail as chief financial officer from 2017.
Education publisher Pearson was also weaker after Exane BNP Paribas downgraded the stock to ‘neutral’ from ‘outperform’.
On the data front, CBI industrial trends are at 1100 BST. In the US, initial jobless claims are at 1330 BST, with leading indicators, existing home sales and consumer confidence at 1500 BST.
