Growing investor unease pervades markets

Heading into the close, the FTSE 100 is holding steady, while the eyes of global investors turn towards the latest Fed decision.

Markets are in their traditional pre-Fed quiet period, awaiting the latest decision from the US central bank. As investors continue to work out the impact from the Saudi Arabia attacks, it’s clear that many have decided to simply wait out the first half of the week, and the liquidity operations of the past two days have only added to this sense of unease. FedEx’s stock has slumped on the open, with markets concerned that the firm’s troubles point to deeper problems. Given the correlation between FedEx and US GDP over the past twenty years, such fears seem well-founded. It will be up to the Fed to issue a comfortingly solid outlook for the US economy, while leaving the door open for more  rate cuts. 25bps are a given for tonight, but any more than that would suggest things are getting more serious than just a precautionary rate cut would seem to warrant.

UK inflation figures seem to have eased the pressure on the BoE to do something about inflation, but the pound has taken the whole thing in its stride, continuing the trend of the past two weeks. This has led to notable FTSE underperformance, with the meagre gains of September far outstripped by the unstoppable rally in the eurozone.