4th Sep 2014 06:40
LONDON (Alliance News) - After touching a 14-year high on Wednesday, the FTSE 100 is set to open flat Thursday, as investors express caution ahead of interest rate decisions by the Bank of England and the European Central Bank.
Futures indicate that the FTSE 100 will open up 1 point at 6,874.2. The blue-chip index closed at 6,873.58 on Wednesday.
US stocks ended Wednesday's trading broadly flat. The DJIA managed to gain 0.1%, while the S&P 500 fell by 0.1%. The NASDAQ Composite recorded a loss of 0.8%.
Asian stocks are trading mixed Thursday with the Nikkei ending the day's trading down 0.3%, while the Hang Seng is down 0.3%. The SSE Composite, meanwhile, is trading up 0.5%.
Markets have been hoping that Thursday's ECB monetary policy statement and press conference will outline an increase in stimulus for the eurozone economy, which has showed continued signs of weakness in recent weeks.
The service-sector purchasing managers' index for August, released on Wednesday, was the latest set of data to display Europe's economic weakness. German service PMI posted a reading of 54.9, down from July's figure of 56.7 and below the market forecast of 56.4. The eurozone as a whole came in at at 52.5 in August, less than the flash estimate of 52.8. In July, the index printed at 53.8.
However, German factory orders on Thursday morning have shown some positivity. The month-on-month figure for July significantly surpassed June's figure of a 2.7% fall, coming in at a growth of 4.6%, which was also ahead of the market consensus of 1.5%.
"Some of the most recent economic data has done nothing to dissuade markets that we might see something today [Thursday], but while we may see the ECB revise its inflation and growth forecasts, we still haven?t seen the end product with respect to the measures that were announced in June and the TLTRO?s," says Michael Hewson, chief market analyst at CMC Markets. "It would therefore be most odd, and out of character to see the ECB take further steps before they have seen the results of their previous measures."
The Bank of England, also meeting Thursday, is expected once again to keep interest rates at their historic low of 0.5%, despite last month's minutes revealing that two members of the monetary policy committee had voted for an immediate rise. The imminent Scottish independence referendum willprovide a further disincentive to change the status quo.
On the London Stock Exchange, Balfour Beatty said it has agreed the sale of its US project management business Parsons Brinckerhoff to WSP Global Inc for GBP820 million in cash. This represents a good return on the roughly GBP380 million it bought the business for in 2009 and surpassed analysts' expectations of GBP650 million. Parsons Brinckerhoff proved the key stumbling block to a failed merger approach by rival Carillion, after Carillion's attempts to stop the Parsons sale were rejected by Balfour.
Public-transport operator, Go-Ahead, in its full-year results, reported a rise in pretax profit to GBP91.2 million from GBP63.1 million the year before. The company also recorded a rise in revenue to GBP2.70 billion, versus a restated GBP2.57 billion, adding that both bus and rail units have delivered a strong performance.
Betfair Group, in an interim management statement, has outlined that it expects a 30% rise in revenue to GBP117.3 million amid a strong performance during the football World Cup and the continued momentum afterwards.
Also in Thursday's economic calendar is US ISM non-manufacturing PMI for August which will be released at 1500 BST. The expectation is a fall from July's figure of 58.7 to 57.5.
By Neil Thakrar; [email protected]
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