17th Sep 2014 06:42
LONDON (Alliance News) - UK stocks are expected to open higher ahead of a busy Wednesday, after China's central bank announced a liquidity injection for the nation's five major state run banks.
Futures indicate that the FTSE 100 will open 15 points higher at 6,806.9. The index closed at 6,792.24 on Tuesday.
While investors have been looking ahead to the US Federal Reserve's interest rate decision, to be announced at 1900 BST Wednesday, it is the Chinese central bank's move which is expected to drive UK shares at the open. According to sina.com, which quoted banking analyst Qiu Guanhua of Guotai Junan Securities, the People's Bank of China will release CNY100 billion to each of the five national banks to boost liquidity. The central bank began releasing the funds on Tuesday under its standing lending facility for a three-month period, the report said.
Asian stocks have had mixed reaction to the injection of funds. The Hang Seng trades up 1.1%, while the Shanghai Composite trades flat. The Nikkei in Japan, however, has closed down 0.1%.
US indices were buoyed by the Chinese central bank's news, which was first reported before the New York close Tuesday, with the DJIA closing up 0.6%, and the S&P 500 and Nasdaq Composite both closing up 0.8%.
The next focus in London Wednesday will be on the Bank of England, which will release the minutes from its latest interest-rate meeting at 0930 BST. Last month's meeting showed a split decision on interest rates, the first time this has happened in over three years, with Ian McCafferty joining known hawk Martin Weale in arguing that it would be appropriate for the central bank to raise the UK interest rate from 0.5%, where it has been since March 2009.
Economists expect September's meeting to show a repeat with two members of the monetary policy committee voting for a rate hike and seven other members voting to keep the rate at its historic low.
However, Jasper Lawler, an analyst at CMC Markets, believes Bank of England the minutes could be quickly forgotten, with Thursday's Scottish independence referendum looming.
"Market reaction to [Wednesday's] Bank of England minutes, unemployment rate and wage data could be similar to yesterday?s reaction to inflation data: essentially short-lived. The British pound sold off into yesterday?s CPI news and a little after but subsequently retraced the entire move with traders exiting the market ahead of the Scottish referendum," the analyst says.
After the release of the Bank of England minutes, investors' attention will turn to the second reading of eurozone consumer price index data for August, to be released at 1000 BST. Economists expect there to be no change from the preliminary reading of 0.3% year-on-year CPI and 0.9% year-on-year core CPI, which excludes volatile components like food, energy, alcohol and tobacco.
FTSE 100 technology firm Smiths Group reported a slight fall in pretax profit in its full-year results to GBP445 million from GBP498 million last year. Revenue fell to GBP2.95 billion from GBP3.11 billion in the previous year. Smiths Group say that results were "significantly reduced" by forex headwinds.
Meanwhile, JD Sports Fashion posted a significant increase in pretax profit in its half-year results to GBP16.5 million from GBP6.1 million at the same time last year. First-half revenue rose to GBP721.5 million from GBP567.4 million in the previous year, and the company has increased its interim dividend to 1.15 pence, up from 1.1125p.
Also ahead today is US consumer price inflation readings to be released at 1330 BST.
By Neil Thakrar; [email protected]
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