London pre-open: Strong start expected after Fed taper

19th Dec 2013 07:40

UK markets are expected to jump on Thursday morning as investors react to the Federal Reserve's move to scale back quantitative easing, ending months of uncertainty for financial markets worldwide.City sources predict the FTSE 100 will open up 52 points from yesterday's close of 6,492.08.Both the Dow Jones Industrial Average and S&P 500 hit new record highs on Wall Street last night after the Fed announced that it would scale back its monthly bond-buying programme from $85bn to $75bn and said it would make similar moderate reductions in the future, subject to incoming economic data.Policymakers predicted that the jobless rate - currently at 7% - would drop to around 6.5% by the end of 2014. However, they stressed that they would hold interest rates close to zero "well past the time that the unemployment rate declines below 6.5%, especially if projected inflation continues to run below the [FOMC's] 2% longer-run goal"."The decision to taper went against our expectation of no change in the policy stance, but we had been highlighting that the incoming data since the September meeting raised the risk of a tapering in December and we felt the decision was close to a coin toss entering the meeting," said Analyst Michael Gapen from Barclays. Stocks to watch Glencore Xstrata has bought up another chunk of Congolese copper and cobalt producer Mutanda Mining for $430m cash. The FTSE 100 group snapped up the remaining 14.5% indirect equity interest held by High Grade Minerals SA to increase its controlling stake to 69%. The remaining equity in Mutanda is held by a subsidiary of Dutch investment outfit Fleurette Properties.Support services group Serco warned that recent contract problems may hit its cash-flow but said 2013 results were likely to meet market hopes. Serco, which is facing a probe into allegations of overcharging for tagging criminals, said it expected free cash-flow this year to be lower than in 2012.Aerospace engineer Meggitt has secured an $18m contract with the Australian Defence Force. The firm will provide hardware and software upgrades to 18 existing WTSS facilities in Australia. BC