London open: Stocks fall as investors mull BoJ, eye Fed announcement

London stocks fell in early trade on Wednesday as investors mulled the latest policy decision from the Bank of Japan and looked ahead to an announcement from the Federal Reserve.

At 0850 GMT, the FTSE 100 was down 0.3% at 8,677.73.

The Bank of Japan maintained its key policy rate steady at 0.5% earlier, as expected.

The decision was reached unanimously at a two-day policy meeting.

The BoJ said in a statement: "Concerning risks to the outlook, there remain high uncertainties surrounding Japan's economic activity and prices, including the evolving situation regarding trade and other policies in each jurisdiction and developments in overseas economic activity and prices under such situation, developments in commodity prices, and domestic firms' wage- and price-setting behaviour.

"Under these circumstances, it is necessary to pay due attention to developments in financial and foreign exchange markets and their impact on Japan's economic activity and prices. In particular, with firms' behaviour shifting more toward raising wages and prices recently, exchange rate developments are, compared to the past, more likely to affect prices."

Danske Bank said: "They highlighted that exchange rate developments are, compared to the past, more likely to affect prices.

"The market reaction to the decision was muted. With the outlook for another significant wage bump this year, we anticipate the BoJ will find room to hike rates again in July."

As far as the Fed decision is concerned, Danske said no change on rates is fully priced in by markets, "but all eyes will be on Powell's communication about the outlook for further rate cuts as well as the updated rate and economic projections".

It added: "The Fed could also provide signals about further tapering or even completely ending QT over coming months."

In equity markets, savings and investments firm M&G jumped to the top of the FTSE 100 as it beat analysts' forecasts with its 2023 results, with net client flows, adjusted profits and operating capital generation all up materially on the previous year.

Softcat surged as it lifted expectations for 2025 operating profit growth after interim earnings jumped by 12%.

On the downside, catering firm Compass Group tumbled after a downgrade to ‘underperform’ from ‘outperform’ by BNP Paribas Exane.

Essentra was also in the red as it said its FY24 performance was in line with previous guidance and market expectations, but that it was "taking a cautious view" on the timing of any material improvement in end-market conditions.

Market Movers

FTSE 100 (UKX) 8,677.73 -0.32%
FTSE 250 (MCX) 20,073.79 -0.12%
techMARK (TASX) 4,761.74 -0.37%

FTSE 100 - Risers

M&G (MNG) 230.60p 4.25%
BAE Systems (BA.) 1,692.00p 2.24%
Shell (SHEL) 2,727.50p 1.17%
Airtel Africa (AAF) 160.70p 0.82%
Pershing Square Holdings Ltd NPV (PSH) 3,698.00p 0.76%
Mondi (MNDI) 1,258.50p 0.72%
Games Workshop Group (GAW) 14,340.00p 0.70%
F&C Investment Trust (FCIT) 1,098.00p 0.55%
Aviva (AV.) 563.20p 0.50%
BP (BP.) 439.90p 0.48%

FTSE 100 - Fallers

Compass Group (CPG) 2,478.00p -5.60%
Flutter Entertainment (DI) (FLTR) 17,905.00p -2.05%
Diageo (DGE) 2,037.50p -2.04%
Schroders (SDR) 380.40p -1.60%
Tesco (TSCO) 321.20p -1.50%
International Consolidated Airlines Group SA (CDI) (IAG) 289.50p -1.46%
GSK (GSK) 1,510.50p -1.37%
Standard Chartered (STAN) 1,191.50p -1.20%
Fresnillo (FRES) 943.50p -1.10%
Glencore (GLEN) 315.95p -0.99%

FTSE 250 - Risers

Softcat (SCT) 1,805.00p 11.21%
Mobico Group (MCG) 64.35p 2.55%
Renishaw (RSW) 2,805.00p 2.37%
Bridgepoint Group (Reg S) (BPT) 328.40p 2.37%
Kainos Group (KNOS) 740.00p 1.93%
Savills (SVS) 955.00p 1.60%
Crest Nicholson Holdings (CRST) 156.00p 1.43%
Trustpilot Group (TRST) 251.50p 1.41%
FirstGroup (FGP) 183.00p 1.22%
Syncona Limited NPV (SYNC) 95.50p 1.17%

FTSE 250 - Fallers

Ferrexpo (FXPO) 72.30p -11.40%
Elementis (ELM) 140.60p -3.83%
Primary Health Properties (PHP) 92.60p -3.29%
Oxford Nanopore Technologies (ONT) 111.40p -3.13%
Dr. Martens (DOCS) 53.60p -2.55%
Discoverie Group (DSCV) 561.00p -2.43%
NCC Group (NCC) 137.00p -2.28%
QinetiQ Group (QQ.) 387.40p -2.02%
Wizz Air Holdings (WIZZ) 1,747.00p -1.63%
Burberry Group (BRBY) 894.40p -1.52%