LONDON MARKET EARLY CALL: Higher Call; UK Wages In Focus Ahead Of BoE

21st Mar 2018 06:52

LONDON (Alliance News) - Stocks in London are set to open higher on Wednesday, ahead of UK average wage data due later in the morning and the Federal Reserve's latest US monetary policy decision at 1800 GMT.

IG says futures indicate the FTSE 100 index of large-caps to open 7.13 points higher at 7,068.40 on Wednesday. The FTSE 100 index closed up 0.3%, or 18.34 points, at 7,061.27 on Tuesday.

Wednesday's UK wage data - due at 0930 GMT alongside the unemployment rate - comes ahead of the Bank of England's latest monetary policy decision on Thursday, and after figures on Tuesday showed inflation eased more than expected to a seven month low in February.

Having been expected at 2.8%, the reading for February came in at 2.7%, also below January's figure of 3.0%. February's reading was the weakest since July, when prices rose 2.6%.

"It has been well established that a number of Bank of England officials are expecting wages to start outstripping headline inflation in the coming months, and a strong average earnings number today could well reinforce that narrative, and raise expectations of a move on rates in May, irrespective of yesterday's softening in headline CPI," says CMC Markets chief market analyst Michael Hewson.

Sterling was quoted at USD1.4011 early Wednesday ahead of the data, higher than USD1.3993 at the London equities close on Tuesday.

In company news late Tuesday, Moody's Investors Service upgraded drugmaker Shire's rating outlook to positive from stable.

"The revision in the rating outlook to positive from stable reflects improving financial flexibility from recent deleveraging, and the potential for further deleveraging over the next 12 to 18 months," said Moody's Senior Vice President Michael Levesque.

The ratings agency affirmed its Baa3 issuer rating of Shire and the Baa3 senior unsecured ratings of rated subsidiaries including Shire Acquisitions Investments Ireland Designated Activity and Baxalta.

Meanwhile, the chief executive of the controversial British data firm at the centre of allegations of electoral interference has been suspended, the company said.

In a statement, the board of Cambridge Analytica said that Alexander Nix had been suspended "with immediate effect, pending a full, independent investigation". The company is alleged to have inappropriately obtained and used the data of 50 million Facebook users.

Facebook closed down 2.6% in the US on Tuesday, having closed down 6.8% on Monday.

In the US on Tuesday, Wall Street ended higher, with the Dow Jones Industrial Average ending up 0.5%, the S&P 500 up 0.2% and Nasdaq Composite closing 0.3% higher.

In Asia on Wednesday, the Shanghai Composite in China is up 0.1%, while the Hang Seng index in Hong Kong is up 0.6%. Markets in Japan are closed on Wednesday for the Vernal Equinox holiday.

In Wednesday's UK corporate calendar, DIY retailer Kingfisher releases full-year results, alongside results from drugmaker Vectura Group, Ferrexpo, ten pin bowling operator Ten Entertainment Group and Empiric Student Property.

In the economic calendar on Wednesday, the CBI industrial trends survey is at 1100 GMT. In the US, MBA mortgage applications are at 1100 GMT, with existing homes sales at 1400 GMT.

Headlining the calendar on Wednesday, however, is the Fed's latest monetary policy decision which will be announced at 1800 GMT.

The Fed is widely expected to raise the federal funds rate to between 1.50% to 1.75% on Wednesday, from 1.25% to 1.50%.

However, focus will lie on dot-plot projections for the year ahead - the Fed's dot-plot being a representation of Federal Open Market Committee members' interest-rate projections - and whether the bank is poised to raise rates four times, instead of the three previously guided.

"We expect traders to be airing on the side of caution in trading on Wednesday, as eyes remain firmly fixed on the Fed rate announcement and press conference later today. The big question is not whether the Fed will hike today, that is as good as certain; however, 3 hikes or 4 is still a dividing question," says Jasper Lawler, head of research at London Capital Group.

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