6th Nov 2014 07:41
LONDON (Alliance News) - UK stocks are set to open lower Thursday, taking its lead from Asia ahead of the European Central Bank monetary policy decision and the subsequent press conference.
Futures indicate the FTSE 100 to open 20 points lower at 6519.0. The index closed at 6,539.14 on Wednesday.
Asian trading is broadly lower as the minutes from the Bank of Japan's most recent meeting failed to add a greater doveish tone to its decision last Friday to accelerate its quantitative easing. The Nikkei closed down 0.9%, while the Hang Seng trades flat, and the Shanghai Composite continues up 0.2%.
US trading ended strongly on Wednesday with the DJIA and S&P 500 closing up 0.6%, but the Nasdaq Composite closed down 0.1%.
The main focus on Thursday will be the ECB's monetary policy decision at 1245 GMT, and subsequent press conference with President Mario Draghi. There have been calls for the ECB to pick up where the US Federal Reserve left off by initiating full quantitative easing to support the region's economy. Furthermore, there has been growing criticism from bankers of Draghi's communication of policy measures.
"Recent noises coming from the eurozone suggest that many central bankers are not happy with how Mario Draghi conveys his message, so it will be interesting to see if we see any change in tact," says Alpari research analyst Joshua Mahony.
"However, for the most part, I am sceptical about the possibility of any further policy measures being introduced for the next few months, instead expecting the ECB to focus upon the [Targeted Long Term Refinancing operation] issue in December and introduction of the [Asset Backed Securities] plan," Mahony adds.
The main opposition to the idea thus far has been the German government and the Bundesbank, but further weaknesses in Germany's own economy may put holes in its resistance.
Another sign of weakness was shown Thursday with German factory orders missing expectations in September to show a growth of only 0.8% month-on-month, missing the expectation of a 2.3% rise. The figure is, however, an improvement on August's reading of a 4.2% decline.
"It's no secret that the Bundesbank is opposed to full-blown quantitative easing, but the fact that they appear to have the company of as much as a third of the governing council alters the arithmetic significantly, and could well be problematic in terms of managing market expectations, about what the ECB is prepared to do, and what it can do without splitting the council," says CMC Markets chief market analyst Michael Hewson.
The Bank of England also will be in focus, when it releases its monetary policy decision at 1200 GMT. Many analysts forecast this to be a non-event with interest rates and asset purchases both likely to be unchanged.
UK grocer WM Morrison Supermarkets said it was making progress in its three-year turnaround plan and narrowed its full-year profit guidance as third quarter sales continued to slide.
The company said it remains on track to meet its full-year profit expectations and narrowed its target for underlying pretax profit to between GBP335 million and GBP365 million, from between GBP325 million and GBP375 million previously. The company reported underlying pretax profit of GBP785 million in the year to February 2, 2014. The figures comes before an expected GBP65 million in development costs are taken out and it books GBP70 million in other costs.
The world's second largest bottler of Coca-Cola products, Coca-Cola HBC AG said markets remain challenging but reported a slight rise in third quarter comparable net profit to EUR148.2 million from EUR148.1 million in the period last year thanks to cost cuts. The company says that it expects to meet full-year expectations.
There have also been corporate releases from AstraZeneca, Randgold Resources and Schroders, amongst others.
UK industrial production and manufacturing production is still to come Thursday, at 0930 GMT, while US initial and continuing weekly jobless claims will be released at 1330 GMT.
By Neil Thakrar; [email protected]
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
AstrazenecaSchrodersRandgold ResourcesCoca-Cola HBCMRW.L