FTSE 100 preview: Footsie seen opening higher on Yellen remarks

FTSE 100 preview: Footsie seen opening higher on Yellen remarks
Written by:
Siana Mishkova
14th November 2013
Updated: 21st October 2019

iNVEZZ.com, Thursday, November 14: Britain’s benchmark equity index is expected to open higher today, tracking a rally on US and Asian markets after US Federal Reserve Vice Chair Janet Yellen, who is widely expected to become the central bank’s next chairman, said the economy and labour market are performing “far short of their potential” and must improve before the Fed can start scaling back its monetary stimulus programme. The FTSE 100 is expected to open some 49 points, or 0.7 percent, higher today, according to data from financial bookmakers, quoted by Reuters.

Yesterday, the Footsie lost 1.44 percent to close at 6,630.00, posting its steepest one-day fall since August 15, as the Bank of England (BoE) improved its outlook for the UK economy, feeding speculation that monetary policy tightening may come sooner than previously expected. The BoE projected yesterday that the UK unemployment rate would fall to 7.0 percent in the third quarter of 2015, almost a year earlier than previously expected, as economic recovery has strengthened. It has vowed to keep its benchmark interest rate unchanged at the current record low of 0.5 percent until unemployment falls below 7.0 percent.

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Financial stocks weighed on the UK’s benchmark stock index, led lower by insurer RSA (LON;RSA) and lenders Standard Chartered (LON:STAN) and Barclays (LON:BARC) (Barclays share price dips amid senior management changes). Among gainers, J Sainsbury PLC (LON:SBRY) rose the most in 19 months after posting a strong earnings report (Sainsbury’s share price up on H1 profit rise).

US markets were upbeat yesterday with the Dow and the S&P 500 closing at new record highs, boosted by strong results from retailer Macy’s (NYSE:M) and by expectations that Yellen, who spoke after the markets closed, would support the Fed’s bond-buying program for an extended period. The benchmark Standard & Poor’s 500 Index added 0.81 percent to close at 1,782.00 and the Dow Jones Industrial Average gained 0.45 percent to finish at 15,821.63.

Yellen’s comments helped Asian stocks to move higher today. Japan’s benchmark index the NIKKEI 225 rose 2.12 percent to close at 14,876.41. The index was also supported by official data, which showed that Japan’s GDP rose by a higher-than-expected annualised 1.9 percent in the third quarter, slowing from 3.8 percent growth in the previous three months. The economic slowdown supports expectations for monetary easing.

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A number of companies are due to report earnings and trading updates today, including football club Manchester United (NYSE:MANU), luxury fashion house Burberry (LON:BRBY), miners Antofagasta (LON:ANTO) and Horizonte Minerals (LON:HZM), oil and gas explorer Ophir Energy (LON:OPHR), energy supplier Centrica (LON:CNA), engineering consultancy WS Atkins (LON:ATK), telecoms retailer Carphone Warehouse (LON:CPW), investment management firm Charles Stanley (LON:CAY), private equity firm 3i Group (LON:III), insurer Amlin (LON:AML), life insurer Prudential (LON:PRU), electronics distributor Electrocomponents (LON:ECM), publishers Euromoney Institutional investors (LON:ERM) and Trinity Mirror (LON:TNI), digital broadcaster Perform Group (LON:PER), property developers Great Portland Estates (LON:GPOR) and New Europe Property Investments (LON:NEPI), home consumer products maker Norcros (LON:NXR), hi-tech solutions developer Pace (LON:PIC), government services company Serco Group (LON:SRP), infrastructure products and galvanizing services supplier Hill & Smith (LON:HILS), consumer packaging company Rexam (LON:REX), construction industry supplier SIG (LON:SHI), house building company Taylor Wimpey (LON:TW.), retailers Ted Baker (LON:TED) and WH Smith (LON:SMWH), communications company Huntsworth (LON:HNT), and Devro (LON:DVO), which produces manufactured casings for the food industry.
Major European companies reporting quarterly results today include Merck, EADS, Vivendi, Bauer, Banca Monte dei Paschi di Siena, Asda, and Air Berlin. On the macroeconomic front, eurozone GDP data is due to be announced. The single currency bloc’s economic growth is projected to have eased to 0.1 percent in the third quarter from 0.3 percent in the second quarter.
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