17th Jul 2015 06:30
LONDON (Alliance News) - The FTSE 100 is called to start lower Friday, giving back some of the gains it made on Thursday on the back of several positive developments in the Greek debt situation.
IG says futures indicate the FTSE 100 to open down at 6,787.8. The index closed up 0.6% at 6,796.45 on Thursday.
Late Wednesday, the harsh bailout terms for the country's third bailout were approved by Greek parliament before the European Central Bank on Thursday raised its emergency liquidity assistance for the country's banks and the Eurogroup agreed in principle to provide a EUR7 billion bridge loan to Athens. More details are expected to be provided on the bridging loan on Friday.
Following the ECB's decision to raise ELA by EUR900 million for a week, Greek banks are set to open again for the first time in three weeks. Since late June, Greece has had a bank holiday, with the daily withdrawal limit at ATMs set at EUR60 a day. Despite banks set for opening Monday, it is likely that the cash withdrawals limit will only be eased gradually.
Deputy Finance Minister Dimitris Mardas said: "From Monday, the services offered will be widened. All the banks everywhere will be open. There might be a weekly limit on withdrawals, rather than a daily one. This is a proposal we are processing and we think it's technically possible."
Bank of England Governor Mark Carney hinted on Thursday that the central bank will start to consider changing its UK interest rate policy at end of 2015, but said that any increases would be slow and suggested that interest rates would rise to no more than 2.25% in the medium term.
Speaking at Lincoln Cathedral in a speech about the Magna Carta and the Bank of England, Carney said the decision on when to start the process of raising interest rates in the UK, from the current 0.5% rate, "will likely come into sharper relief around the turn of this year".
"It would not seem unreasonable to me to expect that once normalisation begins, interest rate increases would proceed slowly and rise to a level in the medium term that is perhaps about half as high as historical averages," Carney said, indicating rates will rise to around 2.25%.
Meanwhile, US Federal Reserve Chair Janet Yellen also on Thursday said the labour market in the US has move demonstrably closer to a more stable state, providing a reason for the likelihood that the central bank will hike short-term interest rates later this year, The Wall Street Journal reported.
Yellen, speaking before the Senate Banking Committee, having appeared before the House Financial Services Committee on Wednesday, did not specify when the Fed is likely to start raising its benchmark interest rate from its current 0.25% level, though earlier she had said it could happen "at some point this year".
Jasper Lawler, market analyst at CMC Markets, says the rhetoric from Carney and Yellen has been remarkably similar, with both calling for a rate rise at the turn of the year.
"Both the UK and US are hinting at rate hikes, but the Euroland is still going the other way with the 'full implementation' of QE. For that reason, it's not hard to see why the euro-pound exchange rate has fallen to new seven-year lows despite a resolution for Greece," Lawler says.
The pound continues to push to fresh seven-and-a-half year highs against the euro ahead of the open Friday, currently trading at EUR1.4368.
On Wall Street Thursday, the DJIA closed up 0.4% and the S&P 500 up 0.8%. The Nasdaq Composite closed up 1.3% at a new record high closing level of 5,163.1837.
In Asia Friday, the Nikkei closed up 0.3%, the Hang Seng trades up 1.2% and the Shanghai Composite is up 3.3%.
On the corporate front in the UK, Marks & Spencer Group said John Dixon, its general merchandise division executive director, has left the company to pursue other career opportunities.
Dixon will leave the FTSE 100-listed retailer's board with immediate effect and will leave the company on a date to be agreed. Dixon said he is leaving to become the chief executive of another company, though he did not specify which.
British Land Co said it and partner Oxford Properties have signed a lease agreement with DRW Trading Group for the Leadenhall Building in the City of London. The building, known as the "Cheesegrater", is now nearly 90% let or under offer, with only five more floors to be filled, the FTSE 100-listed property developer said.
888 Holdings said it has struck a deal to acquire FTSE 250-listed online gaming rival Bwin.Party Digital Entertainment in cash and shares. 888 has been competing with AIM-listed rival GVC Holdings to acquire Bwin.Party, with the GVC bid having been backed by Canadian gaming company Amaya Gaming Inc. GVC made a bid for Bwin.Party last week which valued the company at 110 pence per share, or GBP906.5 million.
In the economic calendar, there are US inflation data at 1330 BST alongside housing starts and building permits. At 1500 BST there is the Reuters/Michigan consumer sentiment index.
By Neil Thakrar; [email protected]; @NeilThakrar1
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