7th Oct 2014 06:33
LONDON (Alliance News) - UK stocks are set to open slightly lower Tuesday in the absence of any big economic data, as investors look to contain risk ahead of Wednesday's US Federal Reserve meeting minutes, which could give a clearer indication of when a rate hike could occur.
"The problem with big events like [the release of the Fed minutes], as well as the latest Bank of England decision, which comes on Thursday, is that they can prompt a little bit of caution from investors as they don't want to get caught out by these central banks which is very easily done," says Alpari market analyst Craig Erlam.
Futures indicate the FTSE 100 to open down 8 points at 6,555.8. The index closed Monday at 6,563.65.
The Bank of Japan kept its interest rate unchanged at 0.1% at its October meeting as widely expected by economists. The bank also maintained its pledge to increase the monetary base at an annual pace of about JPY60 to 70 trillion.
In addition, the Japanese central bank repeated that it will purchase Japanese government bonds so that its outstanding amount will rise at an annual pace of about JPY50 trillion and to purchase exchange-traded funds and Japan real estate investment trusts to increase at an annual pace of around JPY1 trillion and JPY30 billion, respectively.
The Japanese Nikkei has closed the day down 0.7% on the back of the decision. The Hang Seng trades up 0.6% as the pro-democracy protesters begin talks with the government. The Shanghai Composite remains closed for China's National Day celebrations.
US indices closed Monday lower, with the DJIA down 0.1%, the S&P 500 down 0.2% and the Nasdaq Composite ending down 0.5%.
German industrial production for August fell by 4% month-on-month, falling considerably below the forecast of a 1.5% fall, according to the Statistisches Bundesamt Deutschland. The year-on-year figure showed a fall of 2.8% in August, down from a 2.7% growth in July. This data shows further weakness in the German economy after Monday's poor factory orders.
"Ordinarily, bad data such as this would invite speculation about further monetary stimulus, but if markets think this is a possibility, they haven?t been paying attention for the past five years. We are talking about the European Central Bank here and for all its talk it isn?t the Federal Reserve, and given last week?s announcement, markets will have to make do with the measures announced in the last couple of months until the end of the year at least. Anything else is wishful thinking," says Michael Hewson, chief market analyst at CMC Markets.
FTSE 250-listed Spirent Communications warned that its revenue started to be hit as trading conditions softened in the latter part of the third quarter, and it expects revenue and operating profit in the fourth quarter to be lower than it had hoped.
In a trading update, the company warned that demand levels dipped sharply as a result of merger activity and delays in capital expenditure, as future new technology deployments were being assessed in areas in which Spirent has increased its investments. It said the impact was being most felt in its networks and applications businesses.
Meanwhile, construction company Carillion said the British government has announced that it will be the first company to benefit from a new facility designed to boost UK exports, and it has secured a GBP75 million deal with the support of the scheme to deliver some of the Dubai World Trade Centre District development.
Still ahead on Tuesday is UK industrial and manufacturing production for August will both be released at 0930 BST, before US consumer credit change for August, to be released after the close of European markets at 2000 BST.
By Neil Thakrar; [email protected]
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