FTSE subdued ahead of Fed rate decision

The FTSE 100 opened a touch lower as focus shifted from this week’s historic summit between Donald Trump and the North Korean president onto key central bank interest rate meetings which are due to yield rate decisions and potentially a winding down of the easy money supply in Europe.

Central banks take centre stage

The Federal Reserve will finish its two day session today, most likely resulting in an interest rate increase. The bank is expected to opt for a 25 basis point interest rate increase, and if it does, it will be the seventh consecutive increase in this cycle.

Close on the heels of the Fed the European Central Bank is due to meet on Thursday. 

The markets are hoping for some clarity from European central bankers on their plans to wind down the ECB’s quantitive easing programme which has been in place since the financial crisis.

UK inflation data

Consumer Price Index, Producer Price Index and Retail Sales data due out at 9.30 this morning will show if UK consumer spending has stabilised after declining for several months this spring and if the cold weather and the late onset of Easter were the real reasons behind the decline or if there is a deeper underlying weakness in the economy. 

The pound is a touch weaker against most currencies in anticipation of slightly higher May numbers, down 0.09% against the dollar and down 0.13% against the euro.

Oil prices fall ahead of OPEC meeting

Oil prices continued to decline ahead of the OPEC meeting in Vienna next week with the market pricing in expected output increases from Russia and Saudi Arabia. 

The oil cartel warned Tuesday that there is downside risk to demand and that the outlook for the oil market in the second-half of this year was highly uncertain. 

In the meantime both Russia and Saudi Arabia have already started the process of increasing output and the US is also gradually increasing its rig count. Brent crude traded down 0.46% and WTI was down 0.26%