FTSE 100 gains momentum ahead of Federal Reserve decision

Britain's FTSE 100 index exhibited upward movement on Wednesday, extending its streak of consecutive monthly gains. Investors eagerly awaited the Federal Reserve's policy announcement later in the day, seeking insights into the central bank's stance on interest rates.

The blue-chip FTSE 100 index edged up by 0.3 per cent as of 2:30 pm, following robust monthly gains of 2.4 per cent in April and 4.2 per cent in March.

Market participants awaited signals from Fed Chair Jerome Powell regarding the impact of recent US inflation data on the prospects of rate cuts for the remainder of the year. Expectations for rate cuts have shifted, with money markets pricing in approximately 28 basis points of cuts in 2024, a significant reduction from the 150 basis points estimated earlier in the year.

Karim Chedid, Head of EMEA Investment Strategy for iShares at BlackRock, anticipated the Fed's tone to reflect caution regarding premature rate cuts, considering the ongoing uncertainty surrounding inflation.

Against this backdrop, European markets were poised to benefit from favourable interest rate differentials, mitigating concerns about higher rates compared to their US counterparts.

In company news, GSK advanced 1.7 per cent after raising its full-year profit forecast and projecting higher sales for the first half of the year. Conversely, Haleon faced a 1.7 per cent decline as its first-quarter revenue fell short of estimates.

Among mid-cap stocks, Aston Martin witnessed a notable 7.2 per cent drop following the announcement of a larger-than-expected first-quarter pretax loss.

The FTSE 250 index remained relatively flat amidst the mixed performance of mid-cap stocks.

Market activity was anticipated to be subdued, with several European exchanges closed in observance of Labour Day.

(With Reuters inputs)