10th Sep 2014 08:16
(A market comment published at 0718 BST incorrectly stated the time of the upcoming Treasury Select Committee heading. The corrected article follows.)
LONDON (Alliance News) - UK share prices are set to open lower Wednesday, following disappointing US and Asian sessions, and as investors continue to weigh the risks of a possible vote in favour of Scottish independence in just eight days time.
Futures indicate that the FTSE 100 is set to open 15 points lower at 6,814.
US stocks retraced a little further from recent highs on Tuesday, with the DJIA closing down 0.6%, the S&P 500 down 0.7%, and the Nasdaq Composite down 0.9%. Despite the excitement and volatility caused by the launch of a raft of new products by US technology giant Apple, the biggest company in the S&P 500 ended the session a touch lower, down 0.4%.
The Asian session has been mixed, with the Nikkei closing up 0.2%, while the Hang Seng is heavily lower, down 1.8% after returning from a market holiday on Tuesday, and the Shanghai Composite is down 0.6%.
The domestic focus Wednesday will be on Mark Carney, when the Bank of England governor sits to face questions about the August inflation report from UK MP's on the Treasury Select Committee at 1445 BST.
The BoE used the August inflation report to hammer home its message that UK interest rates will not be rising until wage growth starts to pick up. Overall the report served to push back market expectations for the timing of the first UK interest rate rise well into next year. Speaking at the Trades Union Congress in Liverpool on Tuesday, Carney was quite transparent in saying that the central bank forecasts real wage growth to return around the middle of next year, backing up the rate rise timetable already priced into the market.
Monetary policy is not set by Carney alone, however, and on this occasion he will face MP's along with colleague David Miles, as well as new voting member Nemet Shafik, and known dissenter Martin Weale. Weale was one of two members to register a vote in favour of a 0.25 basis point rise at the August rate setting meeting the week before the inflation report was published. The MP's will likely push all the members on the justifications for their recent voting patterns.
Furthermore, given the reaction in the markets to recent polls suggesting that the Scottish pro-independence campaign is gaining momentum in the run up to the September 18 referendum, it also seems highly probable that the MP's will want to know more from the BoE about how it would handle a "Yes" vote. Carney's consistent message up until now has been that a currency union between the UK and an independent Scotland will not be feasible.
There is little else of note in the economic calendar Wednesday, although the Scotland issue is highly likely to grab more headlines, given that David Cameron has cancelled Prime Minister's Questions so that all three of the main party leader could go to Scotland Wednesday, where they will be pushing the "Better Together" message.
From the UK corporate calendar Wednesday, preliminary full-year results have been released from housebuilder Barratt Developments. In an outstanding year for the sector, Barratt's pretax profit more than doubled, as the average selling price of its homes rose by 13%.
Small-cap construction group McBride also has released full-year numbers, along with FTSE Fledgling chocolate retailer Thorntons. Sports Direct has released an interim management statement, London Stock Exchange has released a trading statement, and Kingfisher Group has released interims results.
By Jon Darby; [email protected]; @jondarby100
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KingfisherLSE.LMcbrideBarratt DevelopmentsSports Direct