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Fed statement to take centre stage on Wednesday

Not much is expected in the way of rate changes from the Fed, so the press conference from chair Jerome Powell will be holding most of the attention

Federal Reserve
The Federal Reserve is widely expected to make no changes to its 2.25%-2.50% target range

With a small let up in the deluge of corporate updates, all eyes will be on the meeting of the US Federal Reserve, which while not expected to bring any major changes will be watched for the accompanying statement from Fed chair Jerome Powell.

In the UK there will be a bit of corporate action in the form of a Capital Markets Day from Pennon Group as well as a trading update from budget airline Wizz Air.

Statement eyed from no change Fed meeting

Away from the churn of corporate trading updates, Wednesday brings the first US monetary policy decision of 2019.

The Federal Reserve is widely expected to make no changes to their 2.25%-2.50% target range at the upcoming FOMC meeting, which concludes on Wednesday, following a hike in December.

Therefore, the accompanying statement and Jerome Powell’s press conference will garner all of the attention.

In a preview, economists at RBC Capital said: “Expect the statement to reflect this shift toward a more cautious/data dependent approach to further hikes.

“We think this narrative eventually also permeates the infamous dot plot (due at the March meeting), where the path of least resistance is lower.”

They added: “While the Fed likely stops short of removing all hikes from 2019, we would not be surprised if the median moved down to just one more 25bp increase, with no more moves beyond 2019.”

Capital Markets Day for Pennon

UK water utility Pennon Group plc (LON:PNN) will be among those getting investor attention on Wednesday as it pitches the City at its Capital Markets Day at the stock exchange.

As is typical, the company will release a statement to investors to coincide with the City shindig.

Most likely is that attention will be the regulatory cycle given that at the end of January comes OFWAT's business plan assessment.

“This offers both up and downside risk as OFWAT could command significant changes (negative) or very few (positive) to plans,” Morgan Stanley analysts said in a note earlier this month.

It was also noted by the analysts that the CMD may give “more confidence in the growth of the business.”

“Pennon has an attractive (and well-diversified) business mix, with its best-in-class returns in water and growth in waste,” they added.

“This diversification sets it apart from its UK water peers, with its growth in waste providing a key support to the dividend into the next cycle.

“Furthermore, that dividend yield beats peers (5.9% for 2020e, versus 5.5% UK Water average).”

Significant announcements expected:

Wednesday January 30:

Federal Reserve monetary policy decision

Capital Markets Day: Pennon Group plc (LON:PNN)

Trading updates: Wizz Air PLC (LON:WIZZ)

Finals: Low & Bonar PLC (LON:LWB), Staffline Group PLC (LON:STAF), Aukett Swanke Group PLC (LON:AUK)

Interims: Best of the Best plc (LON:BOTB), Hargreaves Services PLC (LON:HSP)

Economic data: UK BoE consumer credit, mortgage approvals; US ADP employment; US preliminary GDP; US pending home sales

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