News Column

MARKET COMMENT: FTSE To Open Lower Amid Caution Ahead Of BoE Minutes

August 19, 2014

LONDON (Alliance News) - UK stocks are set to open marginally lower on Wednesday as markets anticipate the release of the Bank of England and US Federal Reserve minutes.

Futures indicate that the FTSE 100 will open 4 points lower at 6,774.7.

UK stock markets made solid gains on Tuesday as geopolitical issues appeared to be contained for the time being and investors seemed hopeful for continued low interest rates after UK inflation came in lower than expected.

US markets performed strongly overnight, the DJIA and the S&P 500 both closing up 0.5%, and the NASDAQ Composite adding a further 0.3%.

Asian markets, however, have struggled to gain any direction, with the Nikkei closing flat, the Shanghai SSE Composite trading down 0.2%, while the Hang Seng is trading flat.

The Bank of England will release the minutes from its most-recent interest rate meeting at 0930 BST. Despite the caution of the markets Wednesday morning, CMC Markets analyst Michael Hawson believes that investors should be fairly confident of the contents, as any dissent would have likely manifested itself in the Bank of England inflation report, released last week.

"Up until a week ago the contents of the latest Bank of England minutes were eagerly anticipated with expectations fairly high that we might have seen some dissent in the voting patterns with respect to a potential call for an increase in interest rates. This seems much less likely now for a number of reasons, but the main one surrounds how doveish last week’s Bank of England inflation report was, which makes it harder to make that argument," the analyst says.

The Federal Reserve will release its own meeting minutes at 1900 BST. The minutes from the US central bank have the "potential to highlight growing differences in policy," says Carl Paraskevas, senior economist at Lloyds Bank.

"It is already known that one member, Philly Fed President [Charles] Plosser, deferred from the majority vote, although his objection was around the guide on future policy and not the immediate policy stance," Paraskevas adds.

Aside from central banks, the economic calendar is reasonably quiet, the highlight being European construction output at 1000 BST.

Glencore has released interim results showing a first-half net profit increase to USD1.72 billion, up from USD645 million. First-half revenue was also up to USD114.06 billion from USD112.04 billion. The company announced it will begin up to USD1 billion share buyback scheme through to March 31, 2015.

Interim results have also been released from FTSE 250 constituents Hikma Pharmaceuticals, Hochschild Mining and UK Commercial Property Trust.

By Neil Thakrar;

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Source: Alliance News

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