21st Jan 2015 07:35
LONDON (Alliance News) - London markets are forecast to open in positive territory Wednesday, building on four days of gains as investors look ahead to expected stimulus measures from the European Central Bank on Thursday and focus on minutes from the Bank of England's latest policy meeting at 0930 GMT Wednesday.
The FTSE 100 is forecast to open 22 points higher at 6,6642, up from Tuesday's close of 6,620.1.
"European equities are in a good space at the moment and we are calling them higher yet again with optimism continuing to ride high," said Stan Shamu at IG.
The Bank of Japan kept its monetary policy unchanged and lowered its near-term inflation forecast as falling oil prices hamper efforts to lift inflation. At the monetary policy meeting on Wednesday, the policy board of the central bank decided by an 8-1 vote to maintain its target of raising the monetary base at an annual pace of about JPY80 trillion.
Citing lower crude oil prices, the BoJ downgraded its core inflation estimate for fiscal 2015 to 1% from 1.7%. But the central bank lifted the forecast for fiscal 2016 to 2.2% from 2.1%.
Japan's Nikkei closed down 0.5% at 17,515.23. The Hang Seng in Hong Kong is up 1.7% at 234,344.02, and the Shanghai Composite is 4.6% higher at 3,318.991.
In economic news, the latest UK wages and unemployment data for the three months to November are due at 0930 GMT, as are the Bank of England's minutes from its latest policy meeting with no changes to policy expected. US mortgage applications to January 16 and housing starts in December are due in the afternoon session.
"For now, markets are likely to remain preoccupied by the fall in oil prices and the associated weakness of headline inflation," Lloyds Bank says in a note.
Brent crude is quoted at around USD48.28 a barrel Wednesday, up from last week's low of USD45.16. US benchmark West Texas Intermediate is quoted at USD46.81 a barrel. Gold has passed the psychologically important USD1,300 level as wary investors seek safe havens. Early Wednesday it is quoted at USD1,300.53 an ounce.
"Increased safe haven demand has been the primary reason for the upsurge in gold prices, owing in part to the on-going troubles in eastern Ukraine, political uncertainty in Greece and heightened risks of terrorist attacks," says Fawad Razaqzada at Forex.com.
In UK corporate news, SABMiller said difficult trading conditions, particularly in China, held back the company's performance in the three months to December 31, with net producer revenue rising 4%. In China, revenue fell 7% driven by a volume decline of 9%, with double-digit declines in the northeast and central provinces, the company said.
Dixons Carphone said nine-week like-for-like sales to January 3 rose 7%, and the company expects full-year pretax profit between GBP355 million and GBP375 million with market share gains in the UK, Ireland, the Nordics and Greece.
Halfords reported revenue growth of 6.5% in the 15 weeks to January 9 and expects its gross margin to beat full-year guidance
American Express, eBay, and United Rentals report earnings after the close of US markets.
By Ian Edmondson; [email protected]
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