29th Apr 2015 06:42
LONDON (Alliance News) - UK stocks are set to open higher on Wednesday, rebounding from heavy losses on Tuesday, with focus on the US Federal Reserve interest rate decision due after the London close.
"Although the [Federal Open Market Committee] is widely expected to leave policy unchanged at its April meeting, of key interest will be its interpretation of Q1 data trends in the post-meeting statement," says Rhys Herbert, senior economist at Lloyds Bank.
US economic data has been slowing in the first quarter, the most recent of which was Tuesday's consumer confidence figure for April, which fell unexpectedly. The Conference Board said its consumer confidence index tumbled to 95.2 in April from an upwardly revised 101.4 in March. The steep drop came as a surprise to economists, who had expected the consumer confidence index to climb to a reading of 102.5.
Investors on Wednesday will await the preliminary reading of US GDP for the first quarter at 1330 BST, which is expected to show an annualised growth of 1.0%, down from 2.2% recorded in the fourth quarter.
"Today's initial Q1 GDP estimate is expected to show anaemic growth of about 1% annualised. While that in part is likely to reflect adverse weather effects, any indication in the statement that downside risks to growth are deemed to be higher or more durable than previously assumed may trigger a market reaction," Herbert adds.
IG says futures indicate the FTSE 100 to open 8.3 points higher at 7,038.8, rebounding slightly from Tuesday when it fell 1.0% to 7,030.53, reversing the gains made in the previous three sessions, as an equities sell-off in the US on Monday fed through into the European session.
Wall Street ended largely higher on Tuesday, with the DJIA closing up 0.4%, the S&P 500 ending up 0.3%, but the Nasdaq Composite closing down 0.1%.
In Asia on Wednesday, the Hang Seng is down 0.1%, while the Shanghai Composite is trading up 0.3%. Japanese markets are closed for Showa Day.
Barclays reported early Wednesday a 27% drop in first-quarter pretax profit as the bank set aside GBP800 million in provisions that were mostly related to investigations into regulators' investigations into alleged foreign exchange manipulation.
In a statement, the lender reported a pretax profit of GBP1.34 billion in the three months ended March 31, compared with a pretax profit of GBP1.81 billion in the corresponding quarter of the prior year.
British American Tobacco said revenue fell 5.8% in the first quarter of 2015 as exchange rates went against it, but it took market share, grew volumes of its key growth brands, and said revenue would have risen 1.7% if exchange rates had remained constant as price increases offset overall volume declines
It kept its guidance for "another good year of earnings growth" at constant exchange rates in 2015, and said it still expects its profit to be weighted to the second half of the year because the first half is up against strong comparative figures from 2014.
Next reported sales growth in the first quarter of 2015 ahead of its earlier guidance, which it said resulted from the earlier launch of its summer "New-In" brochure, which "helpfully" coincided with much warmer weather.
The fashion retailer reported sales growth of 4.1% in the thirteen weeks to April 25. It said full price sales were up 3.2%, slightly ahead of its guidance in March of 0% to 3%, and said total sales were up more than full price sales due to "a longer tail" to its winter end-of-season sale and a "larger mid-season sale" in Directory.
Smiths Group said it has now closed the EUR600 million senior bond offering that it launched and priced on April 23, and will use the proceeds to repay some debt and for general corporate funding. The notes have an eight-year maturity and were priced at a fixed coupon of 1.25%.
Elsewhere in the corporate calendar, there are first-quarter interim management statements from Weir Group, London Stock Exchange Group and TSB Banking Group. Home Retail Group issued full-year results as did online fashion retailer N Brown, while Redefine International and Spirit Pub Company reported half year results. Standard Life issued a trading statement and Antofagasta released a first quarter production report. GlaxoSmithKline reports first quarter results at 1200 BST.
In the economic calendar, the eurozone economic bulletin is released at 1000 BST along with business and economic sentiment survey results. The German consumer price index reading is at 1300 BST, before US GDP at 1330 BST and pending home sales at 1500 BST. After the close of the London stock market, the US Federal Reserve will announce its interest decision at 1900 BST.
By Neil Thakrar; [email protected]; @NeilThakrar1
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