28th Oct 2014 07:30
LONDON (Alliance News) - UK stocks are set to open a little higher Tuesday, following a bank-led fall on Monday, as the first of the big UK-listed banks release their third quarter results.
Futures indicate that the FTSE 100 will open 36 points higher at 6,399.
The big banks weighed on the UK's leading index Monday after the weekend EU stress test results raised concern over how well capitalised the banks are ahead of the Bank of England's own stress testing which is yet to happen. On December 16 the BoE's Prudential Regulation Authority will apply a more punitive disaster scenario on the UK banks, including a fall in UK house prices of up to 35%, compared the to the 20% tested for by European regulators. All the UK banks passed the EU tests.
"Markets initially gave the results of the stress tests a fairly cautiously positive response but anyone thinking that they could mark a turnaround in the fortunes of the European banking sector, and by definition the European economy, are likely to be in for some significant disappointment" says CMC Markets chief markets analyst Michael Hewson.
A sixth consecutive fall in the German IFO business confidence survey further weighed on sentiment across Europe, while some below-expectation US PMI and home sales data led Wall Street to a mixed close, with the DJIA ending 16 points higher, the S&P 500 about 3 points lower, and the Nasdaq Composite 4 points higher.
The UK banks are back in focus Tuesday, with Lloyds confirming a massive restructuring programme that will see it cut 9,000 jobs, as well as invest about GBP1 billion over the next three years in digital services. The group also set aside another GBP900 million in the quarter for payment protection claims.
Standard Chartered also has released an interim management statement, while energy companies BP and BG Group have released third-quarter results.
There in nothing in the European economic calendar of significance Tuesday, leaving the data focus on releases from the US. Durable goods orders are expected to show an improvement in September, with a rise of 0.5% forecast for the headline number, reversing a tiny bit of the 18.4% fall recorded in August. US consumer confidence is also expected to improve slightly to 87.4 in October, from 86 in September.
The main focus this week, however, remains the Federal Reserve meeting on Wednesday, which is expected to bring an end to quantitative easing.
Twitter shares will be in focus when Wall Street opens later. Shares in the social media giant have fallen 11% in the pre-market after the company posted a third quarter loss of USD175.5 million, widened from USD64.6 million a year earlier.
By Jon Darby; [email protected]; @jondarby100
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