15th Jan 2015 07:33
LONDON (Alliance News) - London stocks are set to rebound Thursday from sharp falls suffered on Wednesday, as worries over the health of the global economy subside somewhat after crude prices climbed of their lows.
The FTSE 100 is forecast to open 71 points higher at 6,459. The index dropped 2.4% to 6,388.46 on Wednesday, its biggest one-day fall since mid-December, dragged down by mining companies after copper prices sank to a five-year low.
Wall Street also ended lower Wednesday, with the DJIA closing down 1.1% at 17,427.09.68, hampered as well by US retail sales figures for December, which recorded a surprise 0.9% drop from November.
"The stock market sell-off seen across the board yesterday appears to have been brought about concerns about the prospects for growth in China and in Europe weighing on sentiment, reinforced by sharp declines in the copper price as it dropped sharply to its lowest levels since 2009," says Michael Hewson at CMC Markets.
"Further data deterioration could well prompt a delay in the tightening of policy by the Federal Reserve in the coming months, with the possibility that the rate hike currently being expected by the market sometime this year, may not happen at all until 2016," Hewson adds.
The World Bank said the global economy is forecast to grow moderately this year, citing stronger growth in the US and Britain but weakness in the euro zone and Japan. "The forecast for Euro Area growth is a sluggish 1.1% in 2015, rising to 1.6% in 2016-17," the World Bank said, cutting its 2015 forecast from 1.8% previously and 2016 from 1.9%.
Brent crude is quoted up at around USD48.80 a barrel early Thursday after touching a new six-year low of USD45.16 during Tuesday's session. US benchmark West Texas Intermediate was quoted at USD47.60 a barrel, up from a low of USD44.17.
"A rebound in oil prices over the last couple of days provides some reprieve for energy stocks and other sectors continue to be supported by expectations that the ECB will announce its own version of quantitative easing this time next week," says Craig Erlam at Alpari.
The European Court of Justice gave a positive assessment of the European Central Bank's so-called Outright Monetary Transactions programme, which forms the basis of its government-bond plans giving a green light to ECB President Mario Draghi to launch a government bond-buying programme, possibly as early as next week when the ECB policy-making council meets for the first time this year.
The euro area trade balance is due at 1000 GMT ahead of weekly US jobless claims at 1330 GMT and the Philadelphia Fed Manufacturing Survey at 1500 GMT.
In corporate news, Associated British Foods said it expects a marginal fall in its adjusted earnings per share in the current financial year, as strong growth at its Primark fashion retailer is more than offset by further profit declines in its sugar business and due to the strength of sterling. Primark sales rose 12%, or 15% at constant currency.
Home Retail Group said like-for-like sales at its Argos unit rose just 0.1% in its fiscal third quarter and Homebase sales were up 0.6%. Total sales rose 0.8% due to increased retail space.
Mothercare continued to show progress in its turnaround with a 1.1% rise in like-for-like UK sales in the third quarter and a 16.1% rise in online sales.
Bovis Homes joined other house builders with a positive trading statement, saying it expects a significant rise in full-year profit after a 29% rise in completions and an 11% rise in selling prices to GBP216,000.
Japan's Nikkei closed up 1.9% Thursday at 17,108.7. The Hang Seng in Hong Kong is up 0.6% at 24,270.41, and the Shanghai Composite is 3.5% higher at 3,336.455.
By Ian Edmondson; [email protected]
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
MothercareBovis HomesAB FoodsHome Reit