22nd Jan 2014 07:36
LONDON (Alliance News) - UK stocks are set to open modestly higher Wednesday ahead of the major UK economic focus of the week - the latest unemployment report and minutes from the latest Bank of England policy meeting.
US markets were open again on Tuesday after a holiday on Monday, buy the day remained quiet in terms of major index movement. US stocks closed mixed, with the DJIA up about 0.3% but the S&P 500 down about 0.5%.
Asian stocks have moved slightly higher overnight, with the Nikkei up 0.2% after the Bank of Japan held it's monetary policy unchanged overnight. In Hong Kong, the Hang Seng index is up 0.3%.
Most notably, the Shanghai Composite index has seen large gains, currently up 2.1%, in a continued reaction to a liquidity injection by the People's Bank of China. The bank pumped CNY255 billion via reverse-repurchase agreement Monday. The bank also offered funds to large commercial banks on Monday, following a sharp rise in money market rates.
Spreadbetters are indicating the FTSE 100 to open up 0.3% at 6,850.00.
The UK economy will be back in focus Wednesday, after a quiet data calendar so far this week, with the release of UK unemployment, average earnings data and public sector borrowing statistics, along with the minutes of the latest Bank of England Monetary Policy Committee meeting - all due at 0930 GMT.
Economists expect the headline rate of unemployment to have fallen to 7.3% in November, from 7.4% in October, moving closer to the Bank of England's 7% threshold for starting discussions on whether to raise interest rates.
"We could find ourselves within touching distance of the Bank of England?s 7% ?staging post? two years early," says CMC Markets chief analyst Micheal Hewson.
The markets want Bank of England Governor Mark Carney to update his forward guidance measures, rather than just reiterating that unemployment falling to 7% won't automatically trigger an interest rate increase. "The Bank may have to do a Fed, and change the guidance and only consider rate hikes until the unemployment rate is well below 7%," says Hewson.
Lloyds Bank Head of Market Strategy Charles Diebel doubts this will be fourthcoming, leaving the market disappointed and facing a renewed steepening at the very front-end of the GBP curve", meaning long-term sterling rates rise.
The pound will therefore continue to be in focus Wednesday after its recent strength. Currently trading against the dollar at USD1.6475, the pound's recent strength, has been cited in a number of corporate releases as putting pressure on earnings.
In the corporate calendar Wednesday, exploration and production reports are already out from miners BHP Billiton and London Mining. Pub chain JD Weatherspoon has put out a trading statement and interim management statements have been released from Land Securities, Sage Group and Findel.
Outside of the UK data, there are some afternoon released for the US, with weekly MBA mortgage applications at 1200 GMT and the Redbook of retail sales at 1355 GMT.
Investors will also be watching for headlines coming out of Davos, Switzerland, where the World Economic Forum kicks off Wednesday.
By Jon Darby; [email protected]; @jondarby100
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
Wetherspoon (J.D)Sage GroupLand SecuritiesFindelBHP Group