It has been the usual steady, low-activity trading ahead of a Federal Reserve meeting. M&A activity has boosted sentiment on the margins after the London Stock Exchange Group PLC (LON:LSE) and Deutsche Boerse (DE:DB1Gn) agreed to press ahead with a merger.
It would be a big shock to markets if the Fed hiked rates this time around. The recent bout of strength in the dollar in combination with a pickup in US inflation and calmer markets suggest Fed Chair Janet Yellen may signal the next rise as early as April.
London Stock Exchange shares were marginally lower after the deal was announced. There is still a good chance that American outfit NYSE:ICE will intervene to block the deal with an offer before a March 29 deadline. Even if ICE doesn’t step up, the merger is likely to spark regulatory unease in Europe where the combination of Eurex and LCH Clearnet would create a monopoly player in European derivatives clearing.
Average UK earnings growth was a touch higher than expected in the three months through January but an unchanged unemployment rate and jobless claims twice forecasts meant the data was a net neutral for the British pound ahead of the UK budget and the FOMC.
The financial sector was weak on the FTSE 100 where insurers have been under pressure ahead of the UK budget that is expected to see an increase in insurance premium tax. A rebound off yesterday’s lows in the price of oil has seen the oil and gas sector outperform the rest of the UK benchmark.
Hikma Pharmaceuticals (LON:HIK) and Smiths Group (LON:SMIN) shares were both lower after poorly-received earnings.
US stocks look set to open mixed ahead of the Fed meeting after Super Tuesday saw Donald Trump and Hilary Clinton consolidate their positions as frontrunners for the Republican and Democratic presidential nominations.
USA pre-opening levels
S&P 500: 1 point higher at 2,016
Dow Jones: 3 points lower at 17,248
Nasdaq 100: 1 point lower at 4,366
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