UK stocks shook off the impact of disappointment surrounding big US tech earnings overnight and carved out minor gains on Wednesday ahead of the Federal Reserve Interest Rate decision this evening.
The FTSE 100 was up 0.3% at the time of writing and could become choppier as the session progresses.
Tonight’s announcement should be considered a high volatility event, not because of any changes in rates, but rather the press conference and comments on the trajectory of rates.
“Investors may be sitting on their hands as they await the latest decision from the Federal Reserve – a first interest rate cut hasn’t been pegged any earlier than March so all the focus will be on the messaging which accompanies the announcement,” said AJ Bell investment director Russ Mould.
“The Fed may encourage the recent scaling back of rate cut expectations and the extent to which it does could determine the path markets forge over the coming weeks.”
In addition to tonight’s Federal Reserve decision, traders were reacting to results from major tech companies, including Alphabet and Microsoft.
Expectations were huge going into results, and although both companies beat analyst forecasts, they did not beat to the degree some had been hoping for.
Microsoft was trading down 0.8% as Alphabet slid 5% at the time of writing.
In the UK, GSK reported a solid set of full-year results, sending shares higher by 3%. The company has been frustratingly range-bound and while the current update may not be the catalyst for this range to break to the upside, it does provide support for shares to trend to the top end of the range.
“GlaxoSmithKline (GSK) reported full year and fourth quarter results that look well up with analyst forecasts. Strip out the impact of falling Covid-related sales and underlying revenue growth for the full year and final quarter was 14% and 17% respectively,” said Steve Clayton, head of equity funds, Hargreaves Lansdown.
“GSK sound confident in their statement, highlighting 71 Vaccines and Specialty Medicines now in clinical development, 18 of which have made it as far as phase III trials or beyond. Guidance for the coming year is for earnings growth of 6-9%, with a total dividend of 60p, up from 58p in the year just ended.”
Harbour Energy was the top faller after Goldman Sachs cut the shares to ‘sell’. Harbour Energy shares were down 5% at the time of writing.