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Wall Street lower ahead of Fed decision as FTSE closes in red

FTSE  Federal Reserve Board Chairman Jerome Powell holds a news conference following the announcement that the Federal Reserve raised interest rates by half a percentage point, at the Federal Reserve Building in Washington, U.S., December 14, 2022. REUTERS/Evelyn Hockstein
FTSE and Wall Street traders are waiting to hear from Fed chair Jerome Powell. Photo: Evelyn Hockstein/PA/Alamy (Evelyn Hockstein, REUTERS)

The FTSE 100 and European stocks finished mostly lower this Wednesday as investors await interest rate decisions from the US Federal Reserve, Bank of England and the European Central Bank.

The FTSE 100 (^FTSE) lost 0.29% to close at 7,749 points, while the CAC 40 (^FCHI) in Paris retreated 0.22% to 7,066 points. In Germany, the DAX (^GDAXI) gained 0.21% to 15,160.

Across the pond, stocks were also lower as investors cautiously awaited the Federal Reserve's decision on interest rates later in the day.

The Dow Jones (^DJI) lost 0.75% to 33,829 points. The S&P 500 (^GSPC) retreated 0.30% to 4,064 points and the tech-heavy NASDAQ (^IXIC) slipped 0.23% to 11,558.

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The Federal Reserve will announce its decision after the London market close with a 25bp rate rise expected while the ECB and the Bank of England will reveal their decisions on Thursday with 50bp increases forecast.

Deutsche Bank strategist Henry Allen said: “Given that the quarter point move is anticipated, the main focus today will instead be on any changes to forward guidance, both in the statement and from Fed Chair Powell’s press conference.”

Read more: Average UK house price falls to £258,297

Michael Hewson, chief market analyst at CMC Markets, said: “While Fed officials have insisted that rates will stay high for some time to come, the markets simply don’t believe them, especially when several key inflation indicators have shown that prices are still coming down on a steady trajectory.

“This is what makes today’s Powell press conference such a tricky proposition when it comes to market positioning. The danger for the Fed is in allowing the market to continue to think that rates are likely to come down this year, which in turn could see inflation take off again, especially with the labour market being as tight as it is.”

Back in London, Entain (ENT.L), the gambling giant behind Ladbrokes and Coral, raised it earnings guidance after a strong final quarter of 2022.

Vodafone (VOD.L) fell 2.17% after it reported a slowdown in revenue growth in quarter three from quarter two and said “we can do better.”

Richard Hunter, head of markets at interactive investor, said: “Vodafone faces the twin perils of an extremely competitive landscape and some deteriorating economic conditions, and the latest update highlights the effects of both.”

Across the FTSE-250, Darktrace (DARK.L) shares added 6.42% after the cybersecurity firm announced share buybacks, a day after a short-seller report knocked its shares by as much as 10%.

Read more: Bank of England set to raise interest rates to 4%

Meanwhile, Brent crude (BZ=F) was trading at around $84/barrel ahead of guidance from producer group OPEC and its allies.

In Asia, Tokyo’s Nikkei 225 (^N225) closed flat at 27,346 points, while the Hang Seng (^HSI) in Hong Kong gained 0.93% to 22,045. The Shanghai Composite (000001.SS) also edged higher, rising 0.90% to 3,284 points.

Watch: Markets in 3 Minutes: Fed Decision, Corporate Earnings

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