4th Nov 2013 13:40
LONDON (Alliance News) - US stocks are set to follow UK and European equities higher Monday as investors react to strong data releases and the hope that the ECB's monetary policy statement, later in the week, will reveal a looser monetary policy.
"Despite continued Federal Reserve tapering concerns, global markets are holding strong with European indices broadly trading higher and US futures looking bullish," said Spreadex's Max Cohen.
The possibility of an ECB rate cut either this week or at its December meeting "has seen traders putting risk back into the market," says Matt Basi, head of UK sales at CMC Markets.
Kathleen Brooks, research director at CMC Markets, believes that there is a good chance of a rate cut this week, asking the question, "why wait for the December projections when we know that growth is already weak?"
Strong UK data has also buoyed traders. UK construction activity growth in October surpassed August's recent peak to post the steepest expansion in more than six years, helped by residential building, survey results from Markit Economics showed Monday.
The Markit/Chartered Institute of Purchasing & Supply Purchasing Managers' Index for construction climbed to 59.4 from 58.9 in September.
"UK construction output continues to rise like a phoenix from the ashes, with housing, commercial and civil engineering activity all seeing strong rates of expansion at the start of the fourth quarter," Tim Moore, senior economist at Markit said.
Chinese service sector growth, released earlier, hit a 14-month high in October, with the official PMI rising to 56.3, up from 55.4 in September.
Markit manufacturing PMI from the eurozone for October came in at 51.3, from 51.1, and in line with economist expectations.
Ahead of the New York bell, the FTSE 100 is up 0.5% at 679.94, the FTSE 250 is up 0.4% at 15,519.6, and the AIM All-Share index is up 0.2% at 812.61.
The Nasdaq Composite is called to open up 0.3%, while both the S&P 500 and DJIA are called to open 0.2% higher.
At the individual UK stock level, the UK's Serious Fraud Office said it has opened a criminal investigation into electronic monitoring contracts run by Serco and G4S. The news that the SFO has now started a criminal investigation comes just a day before G4S gives an investor presentation at which it is expected to come under fire for a string of recent contract issues and pressure to break itself up.
Both companies have been adversely affected by the news. Serco is down 0.7%, while G4S is down 1.2%.
Industrial engineering continues to be the biggest falling FTSE 350 sector index, down 1%, weighed down by Weir Group. The company has cut its guidance after warning that revenues and profits were below expectations in the third quarter as it suffered further project delays in its minerals division and a more-gradual-than-expected recovery in its oil and gas markets. Subsequently, Numis has downgraded the company to Add from Buy, cutting its earnings forecasts by 6%.
Still to come on Monday, US ISM New York index at 1445 GMT and US factory orders at 1500 GMT.
These figures "mark the highlights of the macro calendar stateside this afternoon, with many traders still trying to get a firm grip on whether a December taper can be fully priced out of their calculations," says Basi.
By James Kemp; [email protected]; @jamespkemp
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