London pre-open: Significant losses forecast on comments from Philly Fed President
Wed 26 Sep 2012
LONDON (SHARECAST) - City sources predict the FTSE 100 will open down 44 points from yesterday's close of 5,863, as concerns over the situation in Spain grow and investors reaction to comments made by Charles Plosser, the head of the Philadelphia Federal Reserve Bank.
“We are unlikely to see much benefit to growth or employment from further asset purchases,” were Plosser's comments, after which he also suggested that short-term interest rates will need to be hiked earlier than the currently envisaged time frame of the middle of 2015.
Meanwhile, everyone is waiting for a formal request for aid by the Spanish government to the European Central Bank (ECB). The debt-strapped country’s Deputy Prime Minister, Soraya Saenz de Santamaria, said on Tuesday the administration needed to know the amount of Spanish debt the ECB was prepared to buy before requesting intervention in the secondary debt market.
To many this sounded like a bargaining tactic, with Spain’s politicians anxious over the extent of budget cuts they would be required to make in exchange for debt purchases.
In company news, first half profits from international home emergency business Homeserve will be higher than in the corresponding period of last year, and therefore higher than some broker estimates. Adjusted pre-tax profit for the six months ending September 30th is expected to be higher than the £23.5m achieved at the interim stage last year, principally due to the benefits of increasing ownership of Domeo from 49% to 100%. Broker Peel Hunt had forecast £20m.
Waste management group Shanks said it now expects results for the year to March 31st 2013 to be slightly below the current range of expectations after market conditions in the UK and Dutch solid waste markets deteriorated significantly in the first half. Shanks said its organics, hazardous waste, and UK municipal businesses continued to perform robustly and in line with company expectations.
Performance across ICAP's voice and electronic businesses has remained more muted than anticipated at the time of the inter-dealer broker's annual general meeting in July. On the plus side, although activity in global markets has remained subdued in the last six months or so, there has been some improvement in trading volumes in September. As a result, group revenue in the six months ending September 30th is expected to be around 14% lower than the previous year.