14th Dec 2015 07:31
LONDON (Alliance News) - Shares in London are pointing slightly higher ahead of the open Monday, with the FTSE 100 index set to come off lows from September that it touched on Friday, while world oil prices hit new record lows.
Though clearly the main event this week will be the US Federal Reserve interest rate decision on Wednesday, there are still three days until Janet Yellen announces the Federal Open Market Committee's decision to press, or not to press, the rate-hike button.
Before that, eurozone industrial production, due at 1000 GMT, and a speech from European Central Bank President Mario Draghi in Italy are likely to attract some market attention Monday.
"We look for a small rise of 0.3% month-on-month for euro area industrial production in October. German output, already released, disappointed with a smaller-than-expected rise of 0.1% (excluding construction), potentially reflecting ongoing soft external demand, but outturns were somewhat stronger in France and Italy," says Lloyds Bank senior economist Hann-Ju Ho.
"The context for any comments on policy by Mr Draghi will be the lingering disappointment from the increase in policy stimulus by the ECB on December 3," adds the Lloyds economist. "Some ECB speakers have since put the blame on unrealistic expectations of market participants, rather than faulty communication by the central bank. Mr Draghi could reiterate that there can be no limit to policy easing in order to meet the ECB's inflation goal."
IG says futures indicate the FTSE 100 index to open at 5,960.00 points. The index ended down 2.2% at 5,952.78 on Friday, a level it hasn't seen since late-September, with commodities stocks as the main drag after Brent crude prices hit seven-year lows.
Ahead of the open Monday, Brent oil price was at USD37.71 a barrel, a low it hasn't seen since December 2008. At the close on Friday, Brent stood at USD38.18 a barrel. West Texas Intermediate was at USD35.47 a barrel before the London open.
The new lows were made after the Organisation of the Petroleum Exporting Countries said on Thursday last week that its members pumped more oil in November than in any month since late 2008. The cartel also forecast little increase in demand for its crude next year.
This followed an announcement the week before, in which OPEC said it will maintain oil production at current levels and refrained from outlining a production ceiling.
In Asia on Monday the Japanese Nikkei 225 index closed down 1.8%. In China, the Shanghai Composite ended up 2.5%, while the Hang Seng index in Hong Kong trades down 0.9%.
Japan's industrial production climbed for the second straight month in October as initially estimated, final data from the Ministry of Economy, Trade and Industry showed Monday. Industrial production rose a seasonally adjusted 1.4% month-over-month in October, confirming the flash data, after a 1.1% gain in September. Similarly, shipments grew 2.1% in October, as reported earlier.
On Saturday, China's industrial production and retail sales data signalled that economic momentum is picking up in the fourth quarter.
Figures from the National Bureau of Statistics showed that industrial production growth accelerated to a 5-month high of 6.2% in November from 5.6% in October, exceeding the consensus estimate of 5.7%. Likewise, retail sales advanced 11.2% annually after rising 11% in the prior month and was better than the 11.1% growth forecast by economists. Fixed asset investment climbed 10.2% in the year-to-date period in November, the same rate of growth as seen in ten months to October.
Wall Street ended lower Friday, with the DJIA down 1.8%, the S&P 500 down 1.9% and the Nasdaq Composite down 2.2%.
On the UK corporate front, WPP said it has agreed to merge its Australian and New Zealand businesses with STW Communications Group, and increase its shareholding to 61.5% from 23.6%. STW is an Australian Securities Exchange-listed marketing and communications group.
WPP will sell its Australian and New Zealand businesses to STW for AUD512 million, through the issue of STW shares at a price of AUD0.915, and a shareholder loan. As a result, WPP will become the majority shareholder of the enlarged company with a 61.5% interest, and STW will be renamed to align it with WPP.
Drinks giant Diageo said it has appointed its Guinness Nigeria subsidiary as its exclusive spirits distributor. Guinness Nigeria, in which Diageo holds a 54.3% stake, will become the exclusive distributor of Diageo's international premium spirit brands from January 1. Diageo didn't specify the territory of the distribution agreement.
Goldman Sachs has cut Premier Inn and Costa Coffee owner Whitbread to Neutral from Buy, according to traders.
By Daniel Ruiz; [email protected]
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