London’s FTSE 100 topped the 7,000 this morning as investors shift their focus from the potential impact if embattled Chinese property developer Evergrande collapses to today’s rate decision by the US Federal Reserve.
The capital’s premier index climbed 0.87 per cent to 7,041.72 points during early exchanges.
The US central bank will announce its next rate decision today, with most market participants expecting the Fed to keep them unchanged at record lows.
However, experts do think Fed chair Jerome Powell will formally acknowledge the Fed will start to rein the wave of stimulus measures it unleashed in response to the Covid-19 crisis this year. Fresh economic and inflation forecasts will also be published today.
Signs that the US economic recovery is slowing may delay an announcement until October’s meeting.
Michael Hewson, chief market analyst at CMC Markets UK, said: “The fear is that the Federal Reserve is becoming too complacent about rising inflation risks, especially with consumer prices already at its highest level since the early 1990’s.”
“With many of the Fed members who are calling for a scaling back of bond purchases being voting members next year, the timing of a taper still remains very much a matter of when and not if.”
London’s mid-cap FTSE 250 added 0.53 per cent during the morning session, led higher by financial stocks.
Meanwhile, the blue-chip index was boosted by bookmakers Entain and Flutter, both up 6.15 per cent and 4.55 per cent respectively after just an hour of trading.
Entertain is being eyed up by US sports betting giant, DraftKings.
Industrials continued their rebound this morning after suffering heavy losses at the start of the week driven by concerns over plummeting demand for raw materials from China if Evergrande folds.
Pharmaceutical megacaps tempered gains on the FTSE 100, with Astrazeneca and Hikma leading the fallers column.
Asian shares were mixed in overnight trading. Japan’s NIkkei dipped 0.67 per cent. Hong Kong’s stock exchange was closed.