The FTSE 100 eased off marginally on Wednesday as investors prepared for a busy period of central bank action.
Traders chose a cautious approach to stocks with the Federal Reserve due to announce its interest rate decision this evening, closely followed by the Bank of England tomorrow.
Although economists predict no change in rates from either central bank, investors are eagerly anticipating the central banks’ assessments of the economy and hints of when they may next move to alter interest rates.
It will be the first opportunity for central banks to give their reading on the impact of Trump’s tariffs, so markets are understandably showing signs of risk aversion.
“Caution is set to be the name of the game today as investors assess crunch central bank decisions on interest rates amid global tariff turmoil. After gains yesterday, London’s FTSE 100 is on the back foot in early trade as a wait-and-see mood swirls,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“But overall, the more positive sentiment towards UK and other European stocks is expected to continue while equity investors seek safer havens as Trump rips up international agreements and shreds relations with formerly steadfast trading partners.”
London’s leading index was down 0.1% at the time of writing after gently undulating in a tight range for most of the session.
In stark contrast to yesterday’s risk-on move, cyclical sectors showed little signs of life, and very few stocks gained over 1%.
This meant declines in names such as Compass Group, Tesco, GSK and Diageo weighed on the index.
M&G was the FTSE 100’s top riser after releasing a very respectable set of full-year results reflecting strong action on costs and the reduction of debt.
The introduction of a progressive dividend policy will be a positive for investors, who will be pleased to see profits higher than expected.
“After posting an impressive profit beat, investors might have expected more from the dividend, which only saw a modest 2% increase from the previous year.
“While the company’s focus on simplification and streamlining has certainly boosted performance, some underlying challenges remain. Net flows into the asset management division, particularly in the UK, have struggled for some time and while there are signs of improvement, it’s still an area of weakness.”
M&G shares were over 2% higher at the time of writing, touching the highest level since early 2024.