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

(Sharecast News) - London stocks were set to rise at the open on Wednesday following heavy losses in the previous session and after markets on Wall Street ended off their lows, as investors eye the latest policy announcement from the US Federal Reserve. The FTSE 100 was called to open 25 points higher at 7,798.

CMC Markets analyst Michael Hewson said: "For today the focus remains on today's Fed meeting against the backdrop of yesterday's sharp selloff in US banks, which at one point saw PacWest shares slide 40% before rebounding. There doesn't appear to have been a clear catalyst for yesterday's rout in regional bank shares apart from rising nervousness about the effect future rate increases might have on financial stability.

"It is against this volatile backdrop that the Federal Reserve concludes its latest two-day meeting and a decision on whether to raise rates later today. A lot of water has flowed under the bridge since the Fed last raised rates by 25bps in March, in the teeth of concern over financial stability and the US banking system.

"While this is still reverberating across markets, there was a sense it was being contained, although there is some evidence it may be starting to materially affect the US economy, while yesterday's sharp sell-off in regional banks suggests the potential for further concern."

The Fed is widely expected to raise rates by 25 basis points to a range of between 5% and 5.25%.

In corporate news, Lloyds Bank became the latest UK lender to beat quarterly profits forecasts as earnings surged on the back of higher interest rates, although deposits fell sharply.

The bank posted first-quarter pre-tax profit of £2.26bn, up 46% and better than the £1.95bn average of analyst forecasts. Net income, generated after deposit payouts, rose 15% to £4.7bn.

Customer deposits fell by £2.2bn to £473.1bn, including a reduction in retail current account balances of £3.5bn, partly driven by seasonal customer outflows, including tax payments, higher spend and a more competitive market, Lloyds said.

Elsewhere, Aston Martin maintained its full-year guidance as it reported a narrowing of its first-quarter losses.

In the three months to the end of March, losses before tax narrowed to £74.2m from £111.6m in the same period a year earlier.

Executive chairman Lawrence Stroll said: "Since the start of the year, we have continued to see strong demand across our product range, with our current range of sports cars essentially sold out for the year."