FTSE 100 preview: Index to open lower as Swiss move sparks volatility

on Jan 16, 2015
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Britain’s blue-chip index is expected to start the last trading day of the week in negative territory taking cues from the US and Asia, with Switzerland’s surprise move to remove its currency cap triggering volatility in financial markets. The Footsie closed in positive territory yesterday after a volatile session, finding support in precious metals miners.

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According to IG, the FTSE 100 will open around 40 points lower at 6458. US stocks declined yesterday after the Swiss National Bank (SNB) scrapped its three-year-old euro cap on the franc. Asian stocks were trading mostly lower this morning.
“The SNB caught almost everyone by surprise and it’s creating unease and anxiety in markets,” Nader Naeimi, head of dynamic asset allocation at AMP Capital Investors, told Bloomberg by phone. “The strategy is capital preservation for now, buying gold to hedge against the volatility which is going to continue.”

With market volatility driving up the gold price, shares in London-listed precious metals miners Randgold Resources (LON:RRS) and Fresnillo (LON:FRES) were in demand in yesterday’s session, helping the Footsie close 1.73 percent higher at 6,498.78 points. Randgold’s share price jumped 6.36 percent to 5,265p while shares in Fresnillo closed 4.78 percent higher at 855p.
Today’s macroeconomic calendar is dominated by inflation data with the European consumer price index (CPI) for December due out at 10:00 GMT, followed by US December CPI at 13:30 GMT. US industrial production numbers are scheduled to be released at 14:15 GMT.
No FTSE 100 companies are due to release reports today. Investors, however, are likely to focus on BP Plc (LON:BP) after a US judge yesterday determined that the size of the Gulf of Mexico oil spill was smaller than the US government claimed, with the ruling reducing the potential maximum Clean Water Act fine for the energy group by several billion dollars.

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