Europe outpaces hesitant Wall Street on FOMC day

The FTSE 100 is 20 points higher as the close looms, but on Wall Street stocks are nervous ahead of the FOMC meeting. 

• FOMC day sees mixed start for Wall Street
• Longer-term outlook positive even with tapering discussion
• ITV stumbles after it opts not to reintroduce interim dividend

It is unlikely to be a particularly exciting FOMC meeting, but there may be hints regarding the process of tapering of asset purchases. The chorus of bears that never seems to quieten despite the plethora of record highs across stock markets will no doubt declare tapering will be the event that finally unhinges the great bull market of 2009-2021, but this is not 2013. The Fed and markets have been here before, and while the chairman of the Fed may have changed a couple of times since then the FOMC is much more accomplished in communicating the details of the taper, when it arrives, and so a market selloff purely on the mention of the ‘T word’ is unlikely. But while European markets make headway this afternoon, Wall Street is a touch quieter, preferring to edge lower, although the history of the 2013 taper tantrum shows that even when markets are unhappy about Fed policy, the improving economic and earnings backdrop which prompted the tapering is, unsurprisingly, a positive for stocks in the longer-term.

Despite ITV’s rosy outlook and improved numbers, it looks like the lack of an interim dividend has negated any positive reaction from investors. Instead the shares are down 2% on a day of gains for European markets generally, and in a session where results from various companies have been well-received. ITV’s position was similar to banks, where strong share price gains since October had been chipped away in recent weeks, but a return to dividends and buybacks has helped prop up sentiment. ITV’s numbers today lacked this piece of good news, putting them on a back foot and leaving the short-term bearish trend intact.