The FTSE 100 reversed early losses on Monday ahead of crucial central bank decisions later this week, which could set the tone for the rest of the first quarter’s financial market’s trade.
Both the Federal Reserve and Bank of England will meet this week and subsequently provide decisions on interest rates.
The FTSE 100 was trading 0.1% higher at 7,773 at the time of writing.
Voting members will weigh stubbornly high rates and softer economic conditions, while having to manage market expectations of rate trajectories.
The Federal Reserve is expected increase rate by 25bps while the Bank of England is predicted to power on with 50bps.
With this weeks hikes largely priced into markets, investors will be keenly watching their press conferences for insight into the pace of future rate hikes.
“The FTSE 100 started Monday firmly on the back foot as investors started to display a bit of nervousness ahead of two big central bank announcements,” said AJ Bell investment director Russ Mould.
“For the most part 2023 has been smooth sailing for stocks but two icebergs lurk in the waters this week in the form of the Federal Reserve and Bank of England interest rate decisions.”
“How far might they dial back rate hikes and the hints they might drop about the future trajectory of their policy decisions are the two things which will be keeping investors up at night.”
Sainsbury’s
Sainsbury’s was again the top riser on the FTSE 100 following news of a stake purchase by Bestway last week. The purchase has undoubtedly increased speculation about a full takeover of Sainbury’s after a period devoid of major M&A rumours.