FTSE 100 seen slightly lower ahead of UK CPI and US rate call

FTSE 100 expected to open slightly lower ahead of UK inflation figures and the key interest rate decision by the US Federal Reserve later in the day.

Spread betting companies are calling the lead index down by around 7 points.

US markets ended the day in positive territory, but off earlier highs, as weaker than expected inflation figures suggested pricing pressures may be on the wane.

At the close the Dow Jones Industrial Average was up 104 points, or 0.3%, to 34,109, the S&P 500 rose 29 points, or 0.74%, to 4,020 and the Nasdaq Composite advanced 113 points, or 1.01%, to 11,257.

The weak data boosted hopes that the Federal Reserve will signal a lower peak in interest rates, and a slower pace of increases, than previously forecast when it makes its latest rate call today. A rate rise of 50bp is still expected.

“We expect this will open the door for Fed Chair Powell to discuss a further step down in the pace of rate hikes at his post-FOMC meeting press conference” said Mickey Levy at Berenberg.

“Chair Powell is likely to lay the groundwork for a 25bp rate hike at the FOMC’s February meeting,” he suggested.

In Asia on Thursday, the Japanese Nikkei 225 index was up 0.7%. In China, the Shanghai Composite was down 0.2%, while the Hang Seng index in Hong Kong was up 0.6%. The S&P/ASX 200 in Sydney closed up 0.7%.

Back in London and results are due from travel company Tui while CPI figures are also set to be reported.

“On the headline CPI numbers we are expecting to see price pressures slowdown from 11.1% to 10.9%, although when inflation is well above 10%, perhaps slowdown isn’t the correct term” commented CMC Market’s Michael Hewson.

“It also isn’t likely to affect the calculus for the Bank of England tomorrow when they are also expected to raise rates by 50bps, although any decision is unlikely to be unanimous,” he added.