9th Jul 2015 06:32
LONDON (Alliance News) - London share prices are set to open higher Thursday, boosted by a rebound in Chinese stocks following Wednesday's sell-off, as investors focus on the UK interest rate decision by the Bank of England, due at 1200 BST.
IG says futures indicate the FTSE 100 to open 29 points higher at 6,519.70. The index closed up 0.9% at 6,490.70 points on Wednesday.
"No change is expected and a ?standard? statement will therefore be issued, with the minutes of the meeting due in a couple of weeks," says Lloyds Bank. "It is worth noting that, from next month, the policy announcement, minutes and quarterly Inflation Report will be released simultaneously, which could lead to some market volatility."
The BoE is expected to keep UK interest rates on hold at 0.5% and maintain stock of purchased assets at GBP375 million.
"European markets look to open higher on Thursday as the threat of Chinese stock market contagion eased thanks to a strong rebound in Shanghai," says CMC Markets analyst Jasper Lawler.
In Asia on Thursday, the Japanese Nikkei 225 closed up 0.3%. Meanwhile, the Hang Seng is up 4.7% and the Shanghai Composite is trading up 6.7% following Wednesday's losses, when the Hong Kong index closed down 5.8% and the Shanghai index fell 5.9%.
"Early moves [Thursday] were again to the downside, but Chinese stock markets levelled out later on before surging over 5% higher, with the latest interventions from the government seemingly having stemmed the tide of selling," writes Lawler. "It appears the drastic measure instituted by authorities yesterday to prevent company insiders and large shareholders from selling for the next six months has done the trick for now."
China has implemented a raft of measures in the past month to try to stop a fall in Chinese share prices. In the latest move, the securities regulator said that shareholders who hold more than 5% of a company's shares must not reduce their holdings in the coming six months. Meanwhile, the state asset regulator ordered the country's centrally administered state-owned enterprises not to sell shares of their listed companies amid "abnormal market volatility."
Consumer prices in China were up 1.4% on year in June, the National Bureau of Statistics said on Thursday. That exceeded forecasts for 1.3% and was up from 1.2% in May. On a monthly basis, consumer prices were flat. Producer prices contracted 4.8% on year in June versus forecasts for a fall of 4.6%, which would have been unchanged.
In the US, the New York Stock Exchange halted trading Wednesday for more than three and a half hours due to what the company called an "internal technical issue."
The disruption to the world's largest stock market was "not the result of a cyber breach," the NYSE said on its Twitter feed. The glitch affected all listed stocks, though trading on US equities continued through other platforms. Open orders at the time of the 1632 BST halt were cancelled, the exchange said.
On the trading floor, blue-jacketed traders wandered the NYSE floor, talked to each other or stood with folded arms in front of screens displaying frozen stock tickers during the first minutes of the shutdown, which ended at 2010 BST.
Wall Street ended lower Wednesday, with the DJIA down 1.5%, the S&P 500 down 1.7% and the Nasdaq Composite down 1.8%.
Meanwhile, the minutes of the June Federal Reserve meeting released Wednesday showed that most US Federal Reserve members are not ready to raise interest rates.
They are waiting for more data to confirm "economic growth was sufficiently strong and labor market conditions had firmed enough to return inflation to the Committee's longer-run objective over the medium term", according to the minutes. There was only one member of the Federal Open Market Committee wanting to hike rates in June, but even that policy maker was willing to remain patient for another meeting or two.
Only ahead amongst significant economic data releases are US jobless claims due at 1330 BST.
In London, Associated British Foods said its results for the full year will be harder hit than expected by the weak euro, as revenue in the first 40 weeks was flat at actual rates amid continued tough trading in its sugar business, offset a still-buoyant performance by discount fashion retailer Primark.
AB Foods, which owns Primark and British Sugar and which operates and agriculture and consumer goods arm, said group revenue for the 40 weeks to June 20 was flat year-on-year at actual currency rates and up by 2% in constant currencies, as the weakness of a euro against a wide basket of currencies hit its results.
Meanwhile, FTSE 100-listed housebuilder Barratt Developments said it expects to post a 45% rise in annual profit for the year to the end of June as it sold more houses at higher prices over the period. Barratt said it expects total completions for the year to the end of June to be up by 11% to 16,447 units from 14,838 a year earlier, on the back of strong consumer demand and increased site numbers.
Berenberg upgraded Smith & Nephew to Buy from Hold, lifting its price target to 1,275 pence from 1,080p, while Goldman Sachs raised Prudential to Conviction Buy List from Buy, cutting its price target to 1,845p from 1,950p. UBS cut Roll-Royce Holdings price target to 980p from 1,200p.
In Greece Wednesday, the cash-strapped country requested a new bailout package from the eurozone, as the clock ticked down on the heavily indebted country's last chance to prevent a bankruptcy.
"We demand an agreement with our neighbours, but one which...will demonstrate to us that there is light at the end of the tunnel," Greek Prime Minister Alexis Tsipras told the European Parliament in the French city of Strasbourg.
The request for a new rescue by the eurozone bailout fund, the European Stability Mechanism, came one week after the country's previous aid package was left to expire because Athens and its creditors were unable to agree on required economic reforms. Athens is now seeking a bailout loan "with an availability period for three years", according to a copy of the Greek request seen by dpa.
By Daniel Ruiz; [email protected]
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