FTSE 100 preview: Benchmark to open marginally higher?

on Dec 4, 2013
Updated: Oct 21, 2019

iNVEZZ.com, Wednesday, December 4: Britain’s benchmark equity index, the FTSE 100, is being picked to open slightly higher today, partly recovering from losses at the beginning of the week, generated mainly by revived tapering jitters. Reuters reports financial bookmakers picking the Footsie to start the day three to four points or 0.06 percent higher. Yesterday, the benchmark moved lower for a third straight day, closing 0.95 percent down at 6,532.43, its lowest level since October 17.

’Taperphobia’ – a fear of what will happen when the US Fed starts to wind back its stimulus programme – has revisited the markets with a vengeance since Monday’s stronger-than-expected US manufacturing data. That angst plus innate caution ahead of Friday’s key US jobs report for November have been weighing on global market sentiment this week.

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The particular fear with tapering is that the persistent signs of strengthening in the US economy may prompt the Fed to start scaling back its equity-friendly economic stimulus programme sooner rather than later – possibly as soon as this month’s FOMC meeting, or perhaps in January, but sooner than the hitherto expected March.

And there’s possibly more to come in today’s US calendar, with traders looking to ADP’s private payrolls report, new home sales figures, services activity readings from the Institute for Supply Management, and the Fed’s Beige Book report on economic conditions.
US stocks fell for a third day in a row yesterday, with the benchmark Standard & Poor’s 500 Index easing 0.32 percent to close at 1,795.15 and the Dow Jones Industrial Average losing 0.59 percent in closing at 15,914.62.

Asian shares were mostly lower overnight UTC, with Japan’s benchmark index, the NIKKEI 225, shedding 2.17 percent to finish at 15,407.94, while Chinese shares fared better on high hopes for economic reforms. Shanghai’s CSI 300 Index closed 1.3 percent higher at 2,475.14 and the Shanghai Stock Exchange Composite Index finished up 1.3 percent at 2,251.76.

**Earnings reports**
In today’s earnings reports, the main focus will be on Tesco, widely expected to report a fall in third-quarter like-for-like sales in its core UK market, a deterioration on the previous quarter when sales were flat (Tesco share price drops on downbeat Q3 sales forecasts). Broker Jefferies International expects the drop in sales to have a limited impact on earnings and surmises that the UK’s largest grocer will signal a step-up in efforts on cash flow and return optimisation. Jeffries believes that the group should reconsider its current UK store expansion plans, as investment focus in grocery retailing progressively shifts online.
Other companies due to release earnings reports today include Standard Chartered (LON:STAN), Brewin Dolphin Holdings (LON:BRW), Numis Corporation (LON:NUM), The Sage Group (LON:SGE), Consort Medical (LON:CSRT), International Greetings (LON:IGR), Polar Capital Holdings (LON:POLR), Science in Sport (LON:SIS), and The Local Shopping REIT (LON:LSR).

The European calendar today includes the Markit UK Services PMI (purchasing managers’ index) for November, the British Retail Consortium’s Shop Price Index, and the second estimate for Eurozone third-quarter GDP, courtesy of Eurostat. The first estimate had the single European economy growing at only 0.1 percent quarter-on-quarter.
Going ex-div today are Associated British Foods (LON:ABF), Aberdeen Asset Management (LON:AND), Land Securities (LON:LAND), London Stock Exchange (LON:LSE), National Grid (LON:NG), SABMiller (LON:SAB), and Severn Trent (LON:SVT). The pay-outs will shave 3.99 points off the FTSE 100, according to a Reuters calculation.
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