Wednesday preview: All eyes on the Fed amid expectations of 25bp cut

(Sharecast News) - All eyes will be on the Federal Reserve's latest policy announcement on Wednesday. Kathleen Brooks, research director at XTB, said: "Although there has been some pushback from FOMC members about the need for an interest rate cut before year end, and a hawkish message from the Fed chair at the November meeting, the market is fully pricing in a 25 basis point cut from the FOMC on Wednesday.

"A rate cut when inflation remains well above target should be a one-off, yet the Fed Fund Futures market is expecting a further two cuts in the coming year. There are also signs that growth will be robust in Q4, defying fears that the Federal government shutdown at the start of Q4 will have dampened growth.

"Also, fears are rising that tariff related costs will start to get passed through to consumers from next year. Inflation expectations also remain elevated, even though they did drop slightly at the start of this month, according to the University of Michigan Consumer Sentiment Survey."

Brooks said this meeting will see revised economic expectations and a revised Dot Plot.

"We think that the Fed Fund Futures market is underpricing the uncertainty in the outlook for the Fed next year, which could lead to a big market reaction if the Fed does not have the appetite for more cuts.

"The Fed could push out expectations for their next rate cut to the second half of the year. If this happens, then it could boost the dollar, which has been the second weakest currency in the G10 FX space, and it has lost more than 1.5% versus the CAD, the AUD and the GBP in that time. A reversal in the dollar could hit these currencies first."

Data released on Tuesday by the Bureau of Labour Statistics showed the number of US job openings ticked marginally higher in October.

The Job Openings and Labor Turnover Survey (JOLTS) - a key measure of labour demand for the Fed - showed that openings nudged up to 7.67m from 7.66m in September. The release of the data was delayed due to the government shutdown.

On the UK corporate front, housebuilder Berkeley Group will release half-year results, while travel company Tui will publish its full-year results.

As far as Berkeley is concerned, AJ Bell analysts Danni Hewson and Russ Mould said analysts and shareholders will watch out for the trends in several key performance indicators, as they assess both the first-half figures and also the outlook for the second half and beyond.

These will include completions and prices, where the benchmarks are last year's first-half figures of 2,103 new homes and £600,000 respectively, input costs and forward sales, which stood at £1.5bn at this stage a year ago.

They will also look out for land purchases and the land pipeline, which was 13,500 plots a year ago, as Berkeley prepares to deploy some £3.7bn over the coming decade on replacement land investment and commitments to its Build to Rent plans.

Hewson and Mould said there will also be much interest in Berkeley's Build to Rent platform and its cash return plans, both of which are key planks of the Berkeley 2035 Strategy.

"The FTSE 100 member's latest goal is to return £640 million in cash to shareholders by September 2030, via dividends and share buybacks," they noted. "That sum equates to just over one sixth of the current stock market capitalisation."

Wednesday December 10

INTERIMS

Cohort, Redcentric

INTERIM DIVIDEND PAYMENT DATE

BlackRock Smaller Companies Trust, Cavendish

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Consumer Price Index (US) (13:30)

Crude Oil Inventories (US) (15:30)

MBA Mortgage Applications (US) (12:00)

Wholesale Inventories (USD) (15:00)

GMS

Virgin Wines UK

FINALS

Fevara

AGMS

Abingdon Health , Ashoka India Equity Investment Trust, Baillie Gifford Japan Trust, BATM Advanced Communications Ltd., Gattaca, Marwyn Value Investors Limited, Virgin Wines UK, Volution Group

FINAL EX-DIVIDEND DATE

Aeci 5 1/2% Prf