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17 Mar 2021 | 07:39

London pre-open: Stocks seen flat as investors eye Fed announcement

(Sharecast News) - London stocks were set for a muted start on Wednesday as investors eyed the latest policy announcement from the Federal Reserve. The FTSE 100 was called to open two points lower at 6,801.

CMC Markets analyst David Madden said: "Volatility was low across the markets yesterday as traders were looking ahead to the Fed's interest rate decision, which will be revealed today. The US dollar moved traded in a small range and so did gold. Commodities that are connected to growth, oil and copper, fell as a mixture of profit taking and worries about Europe's partially stalled vaccination scheme weighed on the markets.

"Equity markets in Asia lost a little ground ahead of the Fed's interest rate decision, European indices are set for a slightly start.

"The Fed meeting is likely to be the main focus of today's session. Interest rates are predicted to remain unchanged and the announcement will be made at 6pm (UK time), while 30 minutes later the press conference will commence. The US central bank is operating an extremely loose monetary policy as a way of providing support to the economy. In recent weeks, we have seen evidence the country is rebounding, unemployment is falling, while services and manufacturing levels are robust. It is encouraging that the economy is turning around but the prospect of higher growth also comes with the prospect of higher inflation."

In corporate news, Hargreaves Lansdown predicted pre-tax profit for the year to the end of June would be "modestly above" the top of analyst expectations after strong dealing volumes continued from the end of January.

The investment platform said "elevated volumes of share dealing" benefited from more trading in international companies, driven by existing clients buying and selling US stocks.

UK outsourcing contractor Serco has been awarded a £400m contract to continue providing support services at the 5 Wing Canadian Forces Base in Goose Bay, Canada.

The company said it anticipated annual revenue of £20m-£30m in the opening years of the initial 10-year period. The contract has provision for two five-year extensions with a potential ceiling value to Serco over the full 20 years, including indexation, of around £870m.
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