5th Mar 2015 07:33
LONDON (Alliance News) - London stocks are set to open lower Thursday, as the market looks forward to ECB President Mario Draghi outlining details of the central bank's planned government bond-buying programme, while also awaiting the Bank of England's rate decision.
Chief market analyst at CMC Markets Michael Hewson says the main focus will be on not only the form of assets the ECB intends to buy, but also on the updates to its growth and inflation forecasts, as these could give clues as to the timeframe of any QE program.
"It is already likely that we?ll see an upgrade to the growth forecast for 2015, from 1%, but we could see a downgrade to the inflation forecast for 2015, of 0.7%," he says. "The inflation forecast for 2016 will be interesting though as it is currently 1.3%, and if it is revised upwards then QE could well have a much more limited shelf life than a lot of people currently expect."
Hewson believes the Bank of England will keep rates unchanged for the 72nd month in a row.
Separately, the Bank of England?s chief banking supervisor has told British lawmakers that he is holding HSBC Holdings? top executives? ?feet to the fire? to ensure they simplify the group and improve its risk controls after a tax evasion scandal at its Swiss private bank, the Financial Times reports Thursday.
The comment from Andrew Bailey, head of the Prudential Regulation Authority, increases the pressure on the biggest British bank to accelerate plans for shedding businesses it judges too risky to manage in an increasingly strict regulatory climate, the paper says.
China's Premier Li Keqiang on Thursday lowered the growth target for China this year to "approximately 7%." Li's speech outlined a government work report on the country's key economic policies for this year. He said China faces challenges including sluggish investment growth, falling prices on manufactured products and an "inefficient" growth model, coupled with problems of overcapacity and lack of innovation.
Germany's factory orders declined at the fastest pace since last August, according to data released by Destatis. Factory orders fell 3.9% in January from the prior month, which was the biggest drop since August, when they plunged 4.2%. Economists had forecast a 1% drop in January after rising 4.4% in December.
IG futures indicate the FTSE 100 to open 15 points lower at 6,904.8. The index closed up 0.4% at 6,919.24 on Wednesday, after a late rally that was emulated in Europe's main equity indices, snapping a three-day losing streak amid a continued focus on full-year earnings from a large number of companies, including ITV and Standard Chartered.
Also late Wednesday FTSE confirmed Hikma Pharma will replace Tullow Oil in FTSE 100, while it said AA, Virgin Money and Imagination Technologies will replace Afren, GAME Digital and Oxford Instruments. These changes will take effect from the market open on Monday, March 23.
Wall Street ended lower Wednesday. The DJIA closed down 0.6%, the S&P 500 ended down 0.4% and the Nasdaq Composite finished down 0.3%.
In Asia on Thursday, the Japanese Nikkei 225 closed up 0.3%, and the Hang Seng trades down 1.2%. The Shanghai Composite is trading down 1.1%.
Brent crude is quoted at around USD60.53 a barrel Thursday, and US benchmark West Texas Intermediate is quoted at USD51.76 a barrel. Gold is quoted early Thursday at USD1,201.81 an ounce.
In London, Aggreko reported early Thursday a fall in profit in 2014, mainly due to large hit from the strength of sterling on its translated overseas earnings, while revenue was broadly flat as challenging trading in Asia Pacific offset strong growth in the Americas and a good performance in Europe, Middle East and Africa.
The temporary power company also said 2015 had got off to an encouraging start, although it warned it may face a hit from the recent sharp fall in oil price later in the year and it's currently expecting its key profit measure to be flat compared with 2014.
Also in the corporate calendar Thursday, Schroders, Aviva, London Stock Exchange Group, Friends Life Group, Inmarsat, CSR, H&T Group, Cobham, Admiral Group, Spirax-Sarco Engineering and Hunting released full-year results. Betfair Group issued an interim management statement. Easyjet gave its traffic statistics for February.
In the economic calendar, Italy's GDP is at 0900 GMT. The Bank of England releases its interest rate decision at 1200 GMT, while the ECB follows at 1245 GMT. In the US, initial jobless claims data is at 1330 GMT, while factory orders are at 1500 GMT.
By Daniel Ruiz; [email protected]
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