24th Jan 2014 07:42
LONDON (Alliance News) - UK stocks are set to open fractionally higher Friday, after falling sharply Thursday, as investors react to comments by Bank of England governor Mark Carney late Thursday on the UK's interest rate policy ahead of his speech in Davos later in the day.
Global stocks fell heavily Thursday as investors digested weak manufacturing data from both China and the US.
In the UK, sentiment is set to be somewhat reversed Friday, with both CMC Markets and IG indicating the FTSE 100 to open marginally higher at approximately 6,780 points.
"While talking about concerns of tighter monetary policy, Bank of England Governor Mark Carney appeared to suggest that the Bank of England?s guidance threshold of 7% unemployment may not be as important as markets had been led to believe," says Michael Hewson, chief market analyst at CMC Markets.
Speaking to the BBC at the World Economic Forum in Davos, Switzerland, the BoE chief said that the case for a rate hike would be examined in the coming Inflation Report. However, policymakers will look at overall conditions in the whole labour market, not just one indicator, he added.
Carney said there is "no immediate need" to raise interest rates. Any change, when it comes, would be very gradual, he added.
In August 2013, the bank pledged to keep interest rates at the record low of 0.50% until the unemployment rate falls to 7%. The jobless rate fell to 7.1% in the three months through November.
However, the UK is "in a different place" now, Carney said.
Investors will now look towards the BoE chief's speech, scheduled for 1205 GMT.
"[Friday's] speech by governor Carney in Davos, as well as his participation on Saturday's panel discussion with the European Central Bank's Draghi and Bank of Japan's Kuroda, could shed some more light on his thinking about forward guidance ahead of next month's Inflation Report," says Jonathan Thomas, senior economist at Lloyds Bank.
In the data calendar Friday, Italian retail sales figures are released at 0900 GMT. UK BBA mortgage approvals are scheduled to be released at 0930 GMT. The number of mortgage approvals is expected to rise to 47,200 in December from 45,044 in November.
The reviews on France and the UK from the global rating agency Moody's Investors Service are also due Friday.
In the corporate calendar, blue-chip Royal Mail Group has released an interim management statement. The provider of postal and delivery services in the UK, reported a 2% increase in like-for-like revenues for the first half of the year, driven by further growth in its parcels revenues. However, the company said parcel volumes were flat for the period as its new size-based pricing meant some customers decided not to send some larger items via Royal Mail.
Overall, like-for-like parcel revenues were up 8% over the nine months to end-December.
In the FTSE 250, Close Brothers Group has released a trading statement, while Workspace Group has released its interim management statement.
By James Kemp; [email protected]; @jamespkemp
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