08.20: The Footsie pushed higher in early trading boosted by strong gains overnight in Asia after Japan’s prime minister announced a larger-than-expected economic stimulus package, although with a Federal Reserve rate decision tonight and UK GDP numbers the overall mood was subdued.
In opening deals, the FTSE 100 was up 25.5 points, or 0.5 per cent at 6,749.3, having closed 13.90 points higher yesterday.
Asian stocks held near one-year highs today as the safe-haven yen slumped after Japan’s government announced a larger-than-expected economic stimulus package, which led most of the region’s bourses higher, with Japan’s Nikkei 225 jumping nearly 2 per cent.
There is a near-consensus view among traders that the Bank of Japan will ease its monetary policy on Friday, most likely by ramping up its already massive purchases of government bonds and riskier assets.
Eastern promise: The Footsie pushed higher in early trading boosted by strong gains overnight in Asia after Japan’s prime minister, Shinzo Abe (pictured) announced a larger-than-expected economic stimulus package
But some market watchers say the BoJ decision is too close to call with many central bank policymakers preferring to hold off on action as they expect a fiscal stimulus package and a delay in next year’s sales tax hike to boost growth.
US equity markets closed mixed overnight, however, with all eyes on the Fed, which concludes its two-day policy meeting today with a rate decision at 7pm London time.
The US central bank is widely expected to stand pat on its monetary policy for now but traders will sift through its statement for any hints of the timing on future interest rate hikes, with no post-meeting press conference scheduled.
Expectations of a September increase are clouded ahead of the US presidential election in November, but markets see a roughly 50-50 chance of a rise in December.
Ahead of that central bank action, traders in London will be focused on UK economic growth, with the first reading for second quarter gross domestic product due at 9.30am.
UK GDP is forecast to ease back to 0.3 per cent in the last quarter, down from 0.4 per cent growth in the first quarter, amid mounting uncertainty in the run up to last month’s referendum on Britain’s European Union membership.
However, some economists are pencilling in GDP to notch up 0.5 per cent growth after a string of reports recently showed a mixed picture for the UK economy ahead of the Brexit vote.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said the ONS first estimate for second quarter GDP will signal whether the UK economy headed into the EU referendum from a position of strength.
He added: ‘First, it will tell us if the referendum gave the UK economy the jitters in the lead up to the vote.
‘There are several indicators which have pointed to a slowdown in economic activity as the referendum approached.’
On currency markets, ahead of the data, the pound was 0.1 per cent lower against the dollar at $1.3110, and down 0.2 per cent against the euro at €1.1938.
Stocks in focus in London include:
GLAXOSMITHKLINE – The drugmaker plans £275million of new investments at three drug manufacturing sites in Britain, signalling its confidence in the country despite last month’s vote to leave the European Union. The company will report its quarterly results at 11am
TAYLOR WIMPEY – Britain’s third-largest housebuilder said the referendum in which Britons backed leaving the European Union has had no meaningful effect on its performance in the last month.
ITV – The commercial TV broadcaster said it expected its key net advertising revenue to slip by around 1 per cent in the first nine months of the year, ahead of analyst expectations, and said it would trim costs to prepare for economic challenges ahead.
ARM HOLDINGS – The chip designer, which earlier this month agreed to be bought by Softbank Group Corp for $32billion, reported a 5 per cent rise in second quarter profit.
CAPITA – The outsourcing group said it was seeing some delays in decision-making in the short term due to the impact of the UK’s vote to leave the EU.
ANTOFAGASTA – The Chile-based miner said full year copper production would be at the lower end of the 710,000-740,000 tonnes it predicted in January this year, but said it was confident targets would be met.
LONDON STOCK EXCHANGE: Deutsche Boerse has won the necessary backing from its shareholders for the planned merger with LSE, with the German exchange operator reporting a 60.35 per cent approval rate ahead of yesterday’s deadline.
UK company news scheduled today includes:
Interims: GlaxoSmithKline (Q2). ITV, ARM Holdings (Q2), St James Place, Taylor Wimpey, Tullow Oil ,Jupiter Fund Management, Lancashire Holdings, Capita, Dignity, McColl’s Retail Group, Rightmove, Metro Bank, Shawbrook, Staffline, Burford Capital, Quartix Holdings, Tarsus Group, Morgan Advanced Materials, Primary Health Properties, Rathbone Brothers, FDM Group Holdings
Finals: Renishaw
Production update: Antofagasta (Q2)
Trading updates: Flybe Group, Marston’s, Mitchells & Butlers.
Economic news scheduled today includes:
US Federal Reserve rate decision at 7pm
GfK German consumer confidence at 7am
Preliminary estimate of second quarter UK growth at 9.30am
CBI monthly retail survey at 11am
US durable goods orders at 1.30pm
US new home sales at 3pm
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