London pre-open: Small gains expected on FTSE, ECB in focus
Thu 04 Oct 2012
LONDON (SHARECAST) - City sources predict the FTSE 100 will open up 11 points from yesterday's close of 5,826, tracking gains seen in the US, which came on the back of slightly better-than-expected employment and service sector data.
Today's economic calendar is rather light, although central banks will be in focus.
Market focus today will be on the European Central Bank’s policy meeting in Frankfurt. After yesterday’s “ECB sources” story suggesting that the ECB was still open to further Greek debt restructuring, President Draghi will likely be questioned on the ‘outright monetary transactions (OMT)’ as well as the ECB’s position on ‘official sector involvement (OSI)’, writes Barclays Research.
Also worth noting, Spain’s Treasury will be looking to auction up to €4bn in short and medium term debt.
As well, the US Federal Reserve will release the minutes of its last rate setting meeting, of the past 12th and 13th of September, at 19:00. “The FOMC minutes will be of interest to see the degree of difference in opinion on the Committee regarding the change in reaction function that was highlighted in the statement that accompanied the decision to commence QE3,” Barclays adds.
Finally, and as regards the BoE’s Monetary Policy Committee, consensus is unanimous in not expecting any changes at today’s meeting. Similarly however, a broad majority of economists seems to be forecasting further moves come November. In the words of economists at Lloyds: “We have argued that the uncertainty surrounding domestic indicators argues against the MPC undertaking further policy action before its November meeting when it will update its economic projections. We hold to this view, expecting policy to remain unchanged in October. On balance, we still expect the Committee to extend QE thereafter as global growth doubts persist.”
UK house prices fell by 0.4% month-on-month in September (Consensus: 0.1%). Speaking at the launch of an initiative to support fast-growing small businesses, the Business Secretary, Vince Cable, said the UK economy is “in a very deep crisis”. He would not be drawn on when growth would resume.
In company news, Ultra Electronics, the defence, security, transport and energy company, has won a contract from the Ministry of Defence to supply a sensor management and situational awareness system. The £14m contract will be executed by the Surveillance Systems business unit within Ultra's Command & Control Systems division. The programme is scheduled to be completed by the end of 2014.
Car and bike parts retailer Halfords has appointed a new Chief Executive Officer (CEO) following the abrupt departure of David Wild in the summer, as it revealed a significant pick-up in trading in the second quarter. Halfords announced late last night that it has appointed Matt Davies, the former CEO at Pets At Home, as its new frontman with immediate effect.
Victrex, maker of peek polymer, said sales momentum continued in the second half of the year as full year volumes reached a new record. Second half volume rose 7% from the same period last year at 1,527 tonnes after strong demand at its polymer solutions business. Full year volume increased to a record of 2,904 tonnes compared to 2,860 tonnes in 2011.
Overnight, analysts at Alpha Value have upgraded their view on shares of Anglo American to add from reduce (Target: 2023p) and on Glencore to reduce from sell (Target: 328).