FTSE 100 preview: Index seen higher as China GDP meets forecasts

on Oct 19, 2016

The FTSE 100 advanced yesterday to close above the 7,000-mark, as investors cheered a sharp uptick in mining stocks, while digesting inflation data from both sides of the Atlantic. This morning the UK benchmark index is set for a positive start, underpinned by Chinese data confirming the world’s second-largest economy had stabilised. According to estimates, the Footsie will open the session two points better off at 7,002.

Chinese gross domestic product (GDP) expanded 6.7 percent in the year to September, in line with forecasts, with tepid private investment compensated for by robust government spending and a heated property market. Other data showed retail sales rising a solid 10.7 percent and urban investment 8.2 percent, but industrial output disappointed by growing only 6.1 percent.
Closer to home, UK jobs data is expected to show a slowdown in hiring amid uncertainty surrounding the Brexit vote. The report from the Office for National Statistics, due out at 09:30 BST, is forecast to reveal UK employers added just 70,000 jobs in the three months to August after 174,000 jobs in three months to July. The unemployment rate is estimated to have held at 4.9 percent during the quarter.

The report comes as business confidence has taken a hit after Britain voted to leave the European Union on 23 June. The Bank of England has projected unemployment will rise to 5.5 percent over the next two years due to Brexit. However, analysts insist the vote will not have too much of an effect on the labour market before Article 50 is triggered next year.
On the corporate front, London- and Sydney-listed BHP Billiton (LON:BLT) today posted its operational review for the three months ended September. The world’s biggest diversified miner revealed that iron ore production had fallen six percent in the period. However, BHP noted that it was finally detecting indications of a commodity market turnaround, giving its most upbeat assessment in about five years. The report is expected to provide a fresh boost to the mining sector.
Reckitt Benckiser Group (LON:RB) and Travis Perkins (LON:TPK) are the other blue-chip companies due to update investors on their recent performance this morning.

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