28th Jan 2015 07:37
LONDON (Alliance News) - London stocks are set to open broadly higher Wednesday, shrugging off downbeat sentiment emanating from Wall Street as US corporate heavyweights disappointed with earnings, with investors focusing instead on the conclusion of the first monetary policy meeting of the year by the Federal Reserve after the close of European markets.
The FTSE 100 is called to open 54 points higher at 6,865, up from Tuesday's 6,811.61 close, down 0.6% on the day. The DJIA ended 1.7% lower Tuesday as Proctor & Gamble, Caterpillar, DuPont, United Technologies and Pfizer among others, disappointing investors with earnings and outlook that fell short of expectations. However, after the close Tuesday, Apple reported record quarterly earnings on strong iPhone sales.
"Yesterday?s sell-off gained a little more impetus in the afternoon session as a significant number of US corporates reported falling short of earnings estimates, hurt by the sharp rise in the US dollar in recent months," says Michael Hewson at CMC Markets.
"Key economic bellwethers such as Caterpillar and Microsoft disappointed with the stronger US dollar playing a role," says Stan Shamu at IG. "Caterpillar is experiencing weaker demand from energy companies as oil and other commodities prices plunge and a stronger greenback is making it more expensive for overseas buyers."
In a light day for European economic news, attention is squarely focused on the policy statement from the Federal Reserve's FOMC meeting which concludes late Wednesday European time, while also keeping watch on events in Greece.
"While investors will have one wary eye on events in Athens, their other preoccupation today will be the first Federal Reserve policy meeting of 2015, for clues as to the potential timing of a US interest rate rise, which on the basis of recent data and events, could well have been pushed back," CMC's Hewson adds.
In Asia, Japan's Nikkei closed up 0.2% at 17,795.73 Wednesday, up from earlier lows. The Hang Seng in Hong Kong is 0.4% higher at 24,893.08 and the Shanghai Composite is down 1.4% at 3,305.738.
Brent crude is quoted at around USD48.94 a barrel Wednesday, and US benchmark West Texas Intermediate is quoted at USD45.35 a barrel. Gold is steady, quoted Wednesday morning at USD1,287.62 an ounce.
Among UK companies, miner Anglo American reported a drop in fourth-quarter copper and nickel production and said it will incur non-cash charges due to the recent drop in commodity prices.
Copper producer Antofagasta said it met its guidance for production and cost controls in 2014 and will continue to focus on controlling its cost base in 2015 whilst increasing production.
AG Barr said an improved trading performance in the final three months of the year will lead to full year revenue of around GBP259 million despite what it called volatile markets that were characterised by periods of intense competitive trading activity.
Severn Trent launched a GBP100 million buyback programme and joined peers in linking its dividend growth in coming years to retail price index measure of inflation, after it accepted the UK water regulator's final determination on the pricing regime for the next five years.
US earnings later Wednesday include Boeing, Citrix Systems, Facebook, Fiat Chrysler Automobiles, General Dynamics and Qualcomm.
By Ian Edmondson; [email protected]
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