UK Stocks Edge Higher on Oil Retreat, Focus Shifts to Federal Reserve Decision
Market Overview and Key Drivers
London Stock Performance
Sept 16 (Reuters) - London shares inched higher on Wednesday as oil retreated, while traders awaited the key U.S. Federal Reserve decision on interest rate hikes due later this day.
The blue-chip FTSE 100 index rose 0.34% to 10,692.21 points by 0926 GMT, while the midcap FTSE 250 climbed 0.46%.
Sector Highlights
Oil and Energy Market Movements
• Oil prices retreated after a two-day rally after reports of additional Saudi crude cargoes via Oman eased Middle East supply concerns. [O/R]
Homebuilders and Real Estate
• Homebuilders rallied 4.4%, led by Barratt Redrow, which gained 8.8%, after reporting stronger reservation rates, a robust order book and profit above forecasts.
Inflation and Economic Data
• On the data front, British inflation accelerated to a five-month high of 3.1% in August, though price growth, excluding surging energy costs, remained stable, official figures showed.
Central Bank Decisions
Federal Reserve Outlook
• Investors are more focused on the Federal Reserve's decision on interest rate hikes later in the day, with traders pricing in a 92% chance of a 25-basis-point hike, according to the CME's FedWatch tool.
Bank of England Expectations
• Meanwhile, the Bank of England is slated to announce its rate decision tomorrow. Traders expect the BoE to hold interest rates steady at this meeting but still see at least a 43.9-basis-point rise priced in by year-end, according to LSEG-compiled data.
Analyst Insights and Stock Movers
Analyst Commentary
• "Near term, AI and oil jitters may help FTSE100, and while domestic macro is tricky, valuations offer cushion,", Barclays analysts said in a note as the index is up 7.6% this year, in line with the STOXX, even after a recent pull-back as bond yields and oil prices surged.
Key Stock Performances
Banking Sector
• Rate-sensitive heavyweight banks gained 1.6% with HSBC rising 1.3% and Standard Chartered adding 2.2%.
Consumer Goods and Retail
• Unilever shed 1.4% after UK competition regulators launched a competition probe into its proposed merger with McCormick.
• Among mid-caps, greeting card retailer Moonpig fell 5.8% despite maintaining its annual outlook, with analysts pointing to consumer spending concerns and profit-taking.
Additional Information
($1 = 0.7425 pounds)
(Reporting by Anand Gopal in Bengaluru; Editing by Vijay Kishore)