London pre-open: Subdued start expected ahead of Fed Meeting

29th Jul 2015 07:41

(ShareCast News) - Investors were expected to remain on the sidelines ahead of the conclusion of the US central bank's policy deliberations on Wednesday evening and post-meeting statement.According to the minutes of April's Federal Open Market Committee policy meeting, "most participants" have a bias towards keeping all their options open at each meeting, especially as pertains to the first increase in interest rates.Nonetheless, any significant variation in the wording of the text might be seized upon by markets to justify expectations of either a September Fed rate hike or a move at a later date.The FTSE-100 was expected to open up by 23 points, the CAC-40 by another 21 points and the DAX-30 by 39 points."[The US central bank] does not want to cause enormous shocks in the markets when it does raise interest rates and until now, a lot of people have not been accepting the message that it wants to raise rates this year. If anything in that statement confirms these suspicions in any way, the Fed may be setting itself up for big market volatility down the road."Unless, of course, its view has actually changed, at which point it should make this perfectly clear," Craig Erlam, Senior Market analyst at Oanda said in a research note sent to clients.Much of the recent data has been pointing towards subdued levels of activity, Michael Hewson, Chief Market Analyst at CMC Markets UK added."Inflation still remains a concern, or rather the lack of it, particularly in the context of the slump in commodity prices in the last 12 months, while wages growth also remains sluggish," Hewson said.Consumer confidence figures for France and Germany are due out early on, followed by the latest data on net lending to individuals in the UK at 09:30.All of the above comes amid frenzied activity on the mergers and acquisitions front which in the first half of the year reached a 2007-high of £1.4trn, according to tally by The Daily Mail.Barclays posts gain in profits despite provisionsBarclays first half results showed an 11% increase in adjusted profit before tax as it set aside a further £1.6bn provision for further litigation and mis-selling after paying £1.6bn in the period. The bank's Tier 1 capital stood at 11.1% with risk weighted assets decreasing to £57bn from £75bn.Capita posted an 11% rise in underlying first-half pre-tax profit as most of it divisions performed well, with particularly strong growth in Asset Services Solutions and a pleasing initial contribution from Capita Europe. For the six months ended 30 June, underlying pre-tax profit came in at £264.9m, up from £238m in the same period last year, on revenue of £2.28bn, up 10% from £2.07bn.St James's Place said an increase in levies impacted its first half earnings, as it posted underlying profit before shareholder tax at £72.9m for the six months to June 2015, about 7% lower than the same period last year. The UK based wealth management business declared a 20% increase in interim dividend despite this.