19th Mar 2025 09:12
(Alliance News) - Stock prices in London opened lower on Wednesday, as investors ready for the Federal Reserve's rate decision, while defence stocks shone on the back of German plans to increase spending.
The FTSE 100 index opened down 36.24 points, 0.4%, at 8,668.99. The FTSE 250 was down 27.24 points, 0.1%, at 20,070.08, and the AIM All-Share was down 1.40 points, 0.2%, at 692.88.
The Cboe UK 100 was down 0.4% at 866.26, the Cboe UK 250 was down 0.1% at 17,504.75, and the Cboe Small Companies was flat at 15,673.90.
Eyes turn to the US Federal Reserve on Wednesday, ahead of its decision on interest rates this evening. The Bank of England is due to announce its interest rate decision on Thursday.
"Markets are currently pricing in little chance of a rate cut at the next Bank of England meeting, though two more rate cuts are currently expected by the end of the year. However, there are substantial risks to this outlook. The latest inflation reading for January came in hot and the macroeconomic situation is volatile as Donald Trump's trade policies threaten to unleash a global trade war, which could damage growth and push up inflation," said AJ Bell analyst Laith Khalaf.
"The spring statement in the UK may also contain some tax and spending decisions which influence the interest rate committee one way or another. In April we will see the chancellor's national insurance and minimum wage hikes come into effect which could also serve to increase prices for consumers, thereby making the Bank of England wary of cutting rates."
In European equities on Wednesday, the CAC 40 in Paris was 0.2% higher, while the DAX 40 in Frankfurt was down 0.3%.
BAE Systems was among the FTSE 100's risers on Wednesday morning, up 2.5% at the London market open. BAE has risen over 45% so far this year.
The defence firm's rise comes on the back of Germany's plans to boost defence spending, as the Bundestag on Tuesday earmarked EUR500 billion for infrastructure and climate protection measures.
Friedrich Merz, likely to be Germany's next chancellor, justified the planned billions in debt, saying it is needed for the security of Germany, Europe and Nato.
"It is a war against our country, too, which is taking place every day," he said, referring to Russia's more than three-year war against Ukraine.
Ferrexpo plunged 12% on Wednesday morning, despite its pretax loss narrowing to USD20.4 million in 2024 from USD68.4 million.
The iron ore pellets producer said Ukraine breached obligations to UK and Swiss investment accords on, adding that there are currently ten civil and criminal cases open against the firm in Ukraine "without merit".
"They are contrary to Ukrainian law, and the underlying legal proceedings in Ukraine have been riddled with procedural defects and due process violations", said Ferrexpo. "In the circumstances, [Ferrexpo] have been left with no option by to send to the government of Ukraine a formal written notification of potential claims."
The pound was quoted at USD1.2970 early on Wednesday in London, down compared to USD1.2991 at the equities close on Tuesday. The euro stood at USD1.0900, against USD1.0931. Against the yen, the dollar was trading higher at JPY149.63 compared to JPY149.55.
Investment manager M&G opened 4.2% higher, following its full-year results release.
The FTSE 100-listed firm reported a swing to loss for 2024 on Wednesday, despite revenue growing 1.5% to pass the GBP1.0 billion mark.
Its trading environment remains "challenging" in 2025, Chief Executive Officer Andrea Rossi noted.
"Increased geopolitical uncertainty and market volatility continue to weigh on customer and client sentiment and pose a significant challenge to financial institutions across the globe. At M&G, we are confident that we can navigate this uncertain environment by leveraging the strength of our business model which we believe will remain a source of competitive advantage," the CEO said.
In Asia on Wednesday, the Nikkei 225 index in Tokyo ended down 0.3%. In China, the Shanghai Composite lost 0.1%, while the Hang Seng index in Hong Kong was 0.1% higher. The S&P/ASX 200 in Sydney closed down 0.4%.
In the US on Tuesday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.6%, the S&P 500 down 1.1% and the Nasdaq Composite down 1.7%.
Brent oil was quoted at USD70.29 a barrel early in London on Wednesday, from USD70.76 late Tuesday.
Gold was quoted at USD3,041.81 an ounce, up against USD3,035.29.
Still to come on Wednesday's economic calendar, are eurozone consumer price index figures at 1000 GMT. The Fed decision is at 1800 GMT.
Pepperstone analyst Michael Brown commented: "Powell & Co announce policy later on, though no changes are expected; the target range for the fed funds rate should remain at 4.25% - 4.50%, in a unanimous vote, with quantitative tightening also set to continue at its current rate. Policymakers will, by and large, be seeking not to 'rock the boat' today, issuing a broadly similar statement to that released last time around, and with Powell repeating that the Committee are in 'no hurry' to deliver further rate cuts, as the economy remains in a 'good place'."
By Emily Parsons, Alliance News reporter
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