UK stocks are expected to edge higher this morning, with investors seen avoiding strong bets ahead of the US Federal Reserve’s interest rate decision later in the day.
Asian stocks joined a global rebound as the Federal Reserve’s decision approached. The region’s stocks gained the most in two months, with Hong Kong’s Hang Seng Index climbing 2% to break its longest losing streak since 1984.
US stocks rose as the S&P 500 capped its first back-to-back gains in more than a month. Energy companies led a rally with crude oil ahead of the expected rate rise from the Federal Reserve, with Chevron Corp. and Exxon Mobil Corp. gaining more than 3.8%, taking their two-day advances to at least 6.8%.
UK stocks rose yesterday for the first time in 8 days helped by advancing shares of almost all FTSE 100 Index companies. J Sainsbury Plc rose 5.2% after retail research firm Kantar Worldpanel said the company “stands out” heading into Christmas. Peer Wm Morrison Supermarkets Plc increased 4.9%. Glencore Plc added 3% after JPMorgan Chase & Co. upgraded the stock to overweight, the equivalent of a buy.
Policymakers at the US Federal Reserve will decide on interest rates today amid widespread expectations for the first rise in nearly a decade. Federal Reserve chairwoman Janet Yellen has signalled recently that a rise in US rates is a near certainty this month after America’s central bank surprised markets in September when it voted against a change.
The Bank of England has again expressed concern about the UK’s buy-to-let property market. The Bank’s governor, Mark Carney, said he was concerned about high levels of lending to landlords and that the Bank would take action. ‘There are a number of things happening … we are watching it closely and we will take action,’ he told the FT.
Less than two weeks after the European Central Bank president unveiled a beefed-up stimulus program to push inflation back toward its 2% target, fresh falls in the price of crude may have already undermined his efforts. Analysts at Nomura International Plc and JPMorgan Chase & Co. say Draghi’s December forecast of 1% average inflation in 2016 may be too ambitious.