Fed rate move still too close to call

Heading into the close the FTSE 100 is 60 points higher, helped along by M&A news in the drinks industry.

Federal Reserve
Source: Bloomberg
  • Markets hold gains a day ahead of the Federal Reserve
  • SABMiller surges on M&A news
  • US price growth weaker, but home building remains strong

The FTSE 100 has been the standout winner of the day, rising over 1%, but over in the US markets already seem to be suffering from a bout of pre-FOMC jitters, moving just 0.2% higher. Most people would just be glad to get the thing out of the way, to allow a more rational assessment of the situation.

Yesterday’s rally saw the FTSE 100 make another attempt to break through 6200, and that is continuing today, but there is little reason for anyone to chase the market higher as the clock ticks down towards the US rate decision tomorrow.

M&A activity however is helping to distract everyone from the FOMC and provide relief from a dreary day in London. SABMiller has gained 20% on news that it is in talks with AB InBev. The concentration created by the move will necessitate some disposals to avoid bringing down the ire of competition authorities, but this in turn will create some fresh activity that will help to enliven matters as we head into the final quarter.

US prices declined for the first time in seven months, which prompted some selling of the dollar, but even for this important data point the reaction was muted. After all, if Janet Yellen and her team are going to press the button tomorrow, then one CPI reading is unlikely to change their minds.

Meanwhile, home builders in the US are still optimistic, according to a national survey, underlining the point nicely that that the data continues to provide conflicting signals. Perhaps it will be a coin toss decision after all. 

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