Good morning, and welcome to our live coverage of business, economics and financial markets.

London’s FTSE 100 is set to fall when it opens after the US Federal Reserve held interest rates steady despite the increasing expectations of inflation, while Donald Trump’s renewed attacks on Iran promised to add fuel to the price rise fire.

Futures prices suggest the FTSE 100 will drop by about 0.6% when it opens. The UK’s blue chip index rose to a new record as high as 10,951 points on Wednesday morning, but fell back later in the day to 10,864.

Analysts at Deutsche Bank led by Peter Sidorov said the market moves were triggered by last night’s “on-hold Fed decision combined with a relative lack of detail from Chair Warsh”.

Kevin Warsh was appointed by Trump after courting the US president with an agenda to lower interest rates. That has put Warsh in a very tricky position as investors expect inflation to rise because of the US-Israeli attacks on Iran, which have caused oil prices to soar.

Bond yields rose after the Fed meeting, suggesting investors doubt whether the Fed can control inflation. Sidorov and co wrote:

This rise in yields ended up weighing on equities after some big intra-day swings. The S&P 500 went from trading more than half a percent down pre-FOMC to higher on the day during Warsh’s press conference but then saw a sharp drop in the final hour of trading to close -1.52% lower. Equities were also weighed down by another rout in chip stocks, with the Philly semiconductor index slumping by -5.33%.

The declines on the FTSE 100 are likely to be moderated by some strong results on a busy day for UK corporate news: among the reporting companies were BAE Systems, Lloyds Banking Group, London Stock Exchange Group, and Shell.

Jet engine manufacturer Rolls-Royce was also among the companies reporting. It raised its profit guidance yet again, continuing an extraordinary run in recent years. It expects between £4.7bn and £4.9bn in underlying operating profit and £3.8bn to £4.0bn in free cash flow for the full year.

More details to come.

The agenda

  • 9am BST: Germany GDP growth (second quarter; previous: 0.3% quarter-on-quarter; consensus: 0.1%)
  • 10am BST: Eurozone GDP growth (second quarter; prev.: -0.2% quarter-on-quarter; cons.: 0.2%)
  • 10am BST: Eurozone unemployment (June; prev.: 6.2%; cons.: 6.2%)
  • 12pm BST: Bank of England interest rate decision (prev.: 3.75%; cons.: 3.75%)
  • 1pm BST: Germany inflation (July; prev.: 2.3%; cons.: 2.7%)
  • 1:30pm BST: US core personal consumption expenditure index (June; prev.: 0.3%; cons.: 0.2%)
  • 1:30pm BST: US GDP growth (second quarter; prev.: 2.1%; cons.: 2.1%)