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

(Sharecast News) - London stocks were set to rise at the open on Wednesday as investors eyed the latest policy announcement from the US Federal Reserve.
The FTSE 100 was called to open 60 points higher at 7,431.

CMC Markets analyst Michael Hewson said: "We are now at the phase where up to four, and even five rate rises this year are being speculated upon by market participants, a scenario that would have been inconceivable back in September, when even the mere prospect of more than two rate rises was being greeted with concern.

"While no changes to policy are expected today, markets will be looking for clues as to how concerned Fed officials are about headline CPI at 7%, and whether they might be leaning towards a potential 50bps hike in March, rather than the 25bps that is currently priced.

"Given the volatility this week, any sort of indication that Fed officials were leaning in this direction would be risky, however it wouldn't be beyond the realms of possibilities for them to put the idea out there. It would certainly be a surprise if they leaned away from their December guidance, of three rate rises this year and thee for 2023.

"Another topic of interest will be how FOMC members weigh up the timing and scope of balance sheet reduction, in terms of whether we can expect it to start in H1, or H2."

In corporate news, gambling software maker Playtech has again urged shareholders to accept a £2.7bn takeover offer from Australia's Aristocrat Leisure after reports that it is planning a breakup and sale of the group if the bid is blocked by a bloc of Asia-based investors.

Sky News reported that Playtech's directors and its investment banking advisers are discussing dismantling the group, citing unnamed sources.

Software firm Sage said total revenues had grown in the three months ended 31 December thanks to a £31.0m jump in recurring revenues.

Recurring revenue grew 8% to £429.0m, underpinned by a 21% rise in Sage Business Cloud revenue to £280.0m and continued strength in new customer acquisition. Software subscription revenues grew 13% to £336.0m, increasing subscription penetration from 68% to 73%.

However, total group revenues increased 5% to £458.0m as improved recurring revenues were somewhat offset by a 22% drop in SSRS and processing revenues to £29.0m.