London pre-open: Stocks set for soft start ahead of Fed call
London stocks are expected to dip slightly at Wednesday's open after a mixed session on Wall Street ahead of the Federal Reserve's rates decision.
The FTSE 100 was seen falling 5.5 points by traders in the City after ending at a month's high of 7,507.56 a day earlier.
Overnight, the Dow Jones and S&P 500 finished in the red following a President Trump speech to the United Nations General Assembly, where he made it quite clear that the US “would no longer tolerate abuse” when it comes to trade practices, with his ire directed at China, Iran and oil cartel Opec.
"The strident tone of his speech served to temper any further upside ambitions for US stocks, ahead of today’s Federal Reserve rate meeting," said Michael Hewson, chief market analyst at CMC Markets UK.
With a rate rise from the Federal Open Markets Committee more or less a done deal, Hewson said attention will be less on the fact that this will be the third rate rise this year, than on how the Fed sees the glide path for further policy actions.
Oil majors BP and Shell, which have supported London's blue chip benchmark this week amid a four-year high in crude oil prices, may not provide as much support, though while Brent crude was off its highs, it remained well above $81.
In other corporate news, PZ Cussons said first-quarter trading was in line with expectations as growth in Europe and Asia offset problems in Nigeria. In a trading update the maker of Imperial leather soap said its performance in the three months to the end of August was supported by new products and tight cost control.
The AA confirmed that profit margins had moved into a lower gear in the first half of the year as the roadside assistance group increased investment as part of a new strategy. While revenue in the six months to 31 July of £480m was up 2% on a last year, underlying earnings before interest, tax, depreciation and amortisation fell 17% to £161m, leaving the group on track to produce trading EBITDA of £335-345m for the full year.
Elementis on Wednesday said production at its US Chromium facility in North Carolina had been disrupted as a result of Hurricane Florence, although the impact on 2018 earnings would be “modest”. The specialist chemical company said flooding had stopped output, but added that the factory had not sustained any significant structural damage.