London pre-open: Stocks to edge up ahead of Fed announcement

(Sharecast News) - London stocks were set to open a little firmer on Wednesday as investors eyed the latest policy announcement from the US Federal Reserve.

The FTSE 100 was called to open 15 points higher at 7,201.

CMC Markets analyst Michael Hewson said: "The Fed isn't expected to surprise today when it is expected to raise the Fed Funds rate by another 75bps, pushing it up to 4%, following on from three similar moves in June, July and September.

"The main focus of attention has shifted in the past few days towards what might be coming in December, as markets increasingly price the prospect of a policy pivot, pause or slowdown, as we head into year end.

"With the mid-term elections coming in a few days' time, it's hard to see how Powell will be able to draw a line between today's press conference and the December meeting when there will be two CPI reports, as well as two jobs reports between now and then. If as the Fed says it is driven by the data then he will have to keep the prospect of a 75bps rate rise on the table if he is serious as he said back on September, that the FOMC were 'strongly committed' to driving inflation lower.

"His insistence that there was no painless way to drive inflation lower, is equally as valid now as it was then and while we have seen some central banks slow the pace of their own tightening cycles in the form of the RBA and the Bank of Canada, this is mainly down to concern over their housing markets."

On home shores, the Bank of England's latest rate announcement is due on Thursday.

Investors will also be eyeing the latest data from BRC and Nielsen, which showed that shop price inflation reached a fresh record high last month as the price of food continued to spike.

According to the BRC-Nielsen IQ Shop Price Index, shop price inflation reached 6.6% in October from 5.7% a month earlier. That was well above the three-month average of 5.5%, and the highest since the index began in 2005.

Within that, food inflation surged to 11.6% from 10.6% in September, the highest rate on record.

Fresh food saw the biggest prices hikes, with inflation at 13.3% against September's 12.1%, while ambient food inflation rose to 9.4% from 8.6%.

Non-food inflation also hit a series high, however, rising to 4.1% from 3.3%.

Helen Dickinson, chief executive of the British Retail Consortium, said: "It has been a difficult month for consumers, who not only faced an increase in their energy bills, but also a more expensive shopping basket.

"Prices were pushed up by because of the significant input cost pressures faced by retailers due to rising commodity and energy prices and a tight labour market."

Dickinson added that while "some" supply chain costs were now beginning to fall, it was being offset by the cost of energy.

In corporate news, product packaging company Smurfit Kappa said that both revenues and profits were up year-to-date, leading the group to now expect to see full-year underlying earnings of approximately €2.3bn.

Smurfit Kappa said revenues were up 33% year-on-year at €9.72bn, while pre-tax profits were 77% higher at €1.14bn and underlying earnings grew 43% to €1.76bn in the nine months ended 30 September.

Hungary-based budget airline Wizz Air produced a better-than-expected second quarter to help interim profits soar by a third.

The company said revenue per available seat kilometre improved from -10% during the first quarter to a rise of 11% in the three months to September 30, boosting core profit to €218m for the half year.