FTSE 100 preview: Index to take a breather after stimulus rally

on Apr 21, 2015
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Britain’s blue-chip index is expected to open marginally lower this morning, taking a breather from yesterday’s China stimulus-fuelled rally. Investors have a lot to look forward to on the corporate front today, with a string of companies scheduled to update the market on their recent performance.

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CNBC reports that the FTSE 100 is expected to open seven points lower at 7,045. US stocks rose sharply in yesterday’s session after China’s central bank lowered the reserve requirement ratio for all banks by 100 basis points over the weekend in a move to combat slowing growth in the world’s second-largest economy. Asian stocks tracked the US higher this morning.
“China’s monetary policy has been much too tight based on international standards and the RRR cut corrects that to some extent,” Uwe Parpart, managing director and head of Research at Reorient Financial Markets, told CNBC Asia’s Squawk Box. “We expect more of that this quarter.”
The Footsie added 57.50 points to close 0.82 percent higher at 7,052.13 yesterday, with China’s stimulus measures lifting London-listed miners. Anglo American (LON:AAL) posted the most notable gains in the sector, closing 2.72 percent higher at 1,038.00p.
“Mining stocks are sensitive to macro developments in China and the policy easing… should help the sector, given that the country is trying to stimulate demand,” said Robert Parkes, equity strategist at HSBC, as quoted by Reuters.
Macroeconomic releases are in short supply today, with Germany’s ZEW survey of economic sentiment scheduled to be released at 10:00 BST. On the corporate front, London- and Sydney-listed Rio Tinto (LON:RIO) this morning reported a rise in its iron ore production in the three months to the end of March. Other blue-chip companies scheduled to release reports today include Sky (LON:SKY), ARM Holdings (LON:ARM) and Primark owner Associated British Foods (LON:ABF).

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