UK Market Comments

Mid-morning trading sees the FTSE 100 adding to its gains yet again, with Next shares doing their best to shrug off a modest profit warning.

You could be forgiven for thinking that the Fed is not about to end QE today. The reaction in markets has not exactly been what many predicted, with investors apparently sanguine about the prospect of life without regular bond purchases by the US central bank. It is the commitment to low interest rates that is maintaining calm, and expectations are for a dovish Fed decision that will assuage fears about a premature rate hike. On the up today is the mining sector, helped along by rising metal prices on the back of a weaker US dollar, but we’ve seen such short-term moves higher before here and supply gluts in base metals mean that gravity is going to reassert itself in due course. Next shares had a nasty wobble on the open as the company downgraded sales forecasts for the year, while offering up the usual propitiatory statement about the weather. However the buyers have stepped in to lift the shares back above £62. It’s still unwise to bet against Next, and a good winter season would restore the normal run of outperformance at the retail giant.

Facebook earnings last night saw the stock dive, but were brushed aside by the broader market which seemed intent on advancing as much as possible ahead of the FOMC decision. The day is clear of data save for crude inventories, allowing plenty of positioning in advance of the result at 6pm London time. Ms Yellen must walk a fine line, communicating caution on the outlook without spooking the market about a potential slump in global growth. Ahead of the open, we expect the Dow to start 25 points higher at 17,030.