News Column

MARKET COMMENT: UK To Open Flat, Focus Turns To Yellen And Draghi

August 21, 2014



LONDON (Alliance News) - UK stocks are expected to open flat on Friday morning, ignoring the strong trading on Wall Street overnight. Markets will now turn their attention to speeches from Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi at the Jackson Hole conference of central bankers.


Futures indicate that the FTSE 100 will open flat at 6,777.0 points. It closed Thursday at 6,777.66.


The US economy continued to show signs of recovery on Thursday. The DJIA moved back above 17,000 points, while the S&P 500 hit a new record intraday high, after strong economic data was released. In particular, the US manufacturing PMI came in at 58, up from 55.8 in June and well above economists' expectations for 55.7. It was the highest reading since April 2010.


At close of trade the DJIA was up 0.4%, the S&P 500 up 0.3% and the NASDAQ Composite up 0.1%.


Trading in Asia has been mixed Friday as the Nikkei closed the day down 0.3%, while the Hang Seng and the SSE Composite are both trading up at 0.3% and 0.2% respectively.


Investors will be tuning into the Jackson Hole symposium for Yellen's speech on the health of labour markets at 1500 BST. In the past, predecessor Ben Bernanke had used his speech to hint at changes to quantitative easing, and after the week's hawkish Fed minutes, it will be interesting to see whether Yellen maintains her doveish tone.


"While many people will be picking apart every word [Yellen] says today for hints of an earlier rate hike, I donít expect her to follow in the footsteps of Bernanke, instead once again offering very doveish comments and focusing on slack in the economy," says Alpari analyst Crag Erlam.


Meanwhile, ECB President Draghi will be speaking at the conference after the UK market close at 1930 BST.


"Markets will be looking for any sign from Draghi that the ECB plans to loosen further, particularly given the likelihood of another low inflation outturn (for August), in the euro area next week," says Rhys Herbert, senior economist at Lloyd Bank.


In corporate news, HellermannTyton Group is one of the few companies releasing interim results on Friday. The company reported that first-half pretax profit increased to EUR34.6 million from EUR21.8 million and that they have upped interim dividend to 2.82 cents from 1.32 cents.


London Stock Exchange announced its previously flagged rights issue to pay for Russell Investments. The fully-underwritten 3-for-11 rights issue will raise GBP938 million.


By Neil Thakrar; neilthakrar@alliancenews.com




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Source: Alliance News


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