FTSE 100 set to start lower after Fed, ahead of latest Bank of England meeting17 Sep 2020 09:05
6.50am: Weak start for Footsie
The FTSE 100 is set to start on the back foot on Thursday ahead of the latest Bank of England policy meeting, which comes after the US Federal Reserve issued its latest policy decision last night.
CFD and spreadbetting firm IG Markets sees the blue-chip benchmark falling by around 39 points, making the price 6,040 to 6,043 with just over an hour to go before the open.
“There has been a lot of chatter in recent months about the likelihood of whether the Bank of England would go down the negative rate route, to the extent that it has become rather tedious, and a little predictable,” said Michael Hewson, analyst at CMC Markets.
“While Bank of England officials have been careful not to rule out the possibility of such a move the reality is that any such move would be extremely damaging to the UK financial sector which makes up such an important part of the UK economy.
“At least the US Federal Reserve has implicitly ruled out the prospect of such a move, perhaps mindful of the damage it has done in Europe and Japan,” he added.
The Federal Reserve surprised nobody last night, as the US central bank made no changes to policy. It did, however, guide that it intends to keep interest rates low until 2023 - a clear signal that rates will remain supportive in the short and medium-term.
In New York, the Dow Jones Industrial Average finished Wednesday in positive territory adding 36 points or 0.13% at 28,032. But the S&P 500 index dropped 0.46% closing at 3,385 and the Nasdaq Composite shed 1.25% to 11,050.
There was volatility for America’s big-name tech stocks as Facebook found itself in the sights of federal regulators. The social network will reportedly come under the scrutiny of an antitrust investigation by the Federal Trade Commission. Google may also be put under the microscope.
Asian stock indices were also lower. Japan’s Nikkei 225 index lost 140 points or 0.6% trading at 23,334 whilst Hong Kong’s Hang Seng fell 367 points or 1.49% to 24,357. The Shanghai Composite was down 0.69% at 3,261.
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