10th Feb 2015 07:43
LONDON (Alliance News) - London stocks are set to open slightly higher Tuesday following the report that Chinese inflation slowed to a five-year low, raising hopes the Chinese central bank may provide further stimulus.
IG indicates the FTSE 100 to open 6 points higher at 6,843.1. The index closed down 0.2% at 6,837.15 Monday, responding to weak Chinese import figures and continuing concerns the Greek debt situation, after the country's new prime minister delivered a defiant speech at the weekend.
Wall Street closed broadly lower Monday. The DJIA ended down 0.5%, the S&P 500 closed down 0.4% and the Nasdaq Composite also ended 0.4% lower.
In Asia on Tuesday, the Japanese Nikkei 225 closed down 0.3% and the Hang Seng trades up 0.1%. However, the Shanghai Composite is trading up 1.5%, as the weaker-than-expected Chinese economic data lifted hopes for further central bank intervention. The People's Bank of China cut its reserve requirement ratio of banks by 0.5 percentage point to 19.5% last Wednesday.
Chinese inflation slowed to a five-year low in January on easing food inflation, giving space for the central bank to adjust monetary policy to support weakening economic growth. Inflation eased more-than-expected to 0.8% in January from 1.5% in December, the National Bureau of Statistics said Tuesday. This was the lowest since November 2009.
Producer prices slid 4.3% year-on-year following a 3.3% drop a month ago. The rate of decline exceeded the 3.8% drop expected by economists and marked the biggest fall since late 2009. On a monthly basis, producer prices were down 1.1% in January.
CMC Markets chief market analyst Michael Hewson says the weak Chinese data along with the upcoming meeting between Greek Prime Minister Alexis Tsipras and other European leaders, will see Monday's cautious trading continue on Tuesday.
"This cautious tone looks set to continue this morning after some weak Chinese inflation data raised expectations of a further loosening of monetary policy, with investors also looking anxiously ahead to tomorrow?s Eurogroup meeting, after the new Greek government came out swinging over the weekend, confounding expectations that after a brief honeymoon period, they would water down their demands, or at least be more amenable," Hewson says.
Babcock International Group said it expects to meet its expectations for the full year to the end of March on the back of a strong performance from its existing business and from the acquisition of helicopter group Avincis. The FTSE 100-listed support services company said it entered the fourth quarter of its financial year, starting January 1, with its order book at around GBP20 billion and a bid pipeline of around GBP13 billion. Its order book provides 70% revenue visibility for its 2015-16 financial year, it said.
Mondi said it expects its underlying operating profit for 2014 to be higher than the year before and said it expects to book after-tax charges below what it booked last year. The FTSE 100-listed paper and packaging company said it expects its underlying operating profit for the year to December 31 to be higher than the EUR699 million posted in 2013, though it did not provide guidance on how much higher it expects it to be.
Specialty property/casualty insurer and reinsurer Catlin Group reported a 13% rise in full-year pretax profit to USD488 million. The group said net income rose by 7% to USD418 million in the period while return on net tangible assets fell to 16.3% from 17.0% in 2013. Catlin declared a 22 pence dividend as intended and said its expects to declare a special dividend of approximately 12 pence per share following completion of Box Innovation Group sale.
There also have been releases from Bellway, ICAP, and Halma early Tuesday.
In the economic calendar, UK industrial and manufacturing production for December is at 0930 GMT, the National Institute of Economic and Social Research's UK GDP estimate will be at 1500 GMT, and US wholesale inventories also are at 1500 GMT.
By Neil Thakrar; [email protected]; @NeilThakrar1
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