FTSE 100 preview: Index seen steady as investors digest ECB move

on Dec 9, 2016

The UK benchmark index looks set to kick off the last trading day of the week on a mildly positive note, with investors weighing the implications of the European Central Bank’s (ECB) policy decision yesterday. Royal Bank of Scotland Group (LON:RBS) will continue to stay in focus for another session after losing a court battle in relation to its controversial cash call in 2008.

IG’s opening calls suggest that the Footsie will start the day 0.06 percent higher at 6,935 points. The blue-chip index is set to marginally extend gains after the ECB unexpectedly announced that it had decided to to trim the size of its asset purchase programme while also extending it for longer than anticipated. US stocks meanwhile continued their post-election rally last night, while Asian shares have edged lower this morning, but remain on track to post a gain for the week.

At home, the Footsie added 29.32 points to end yesterday’s session 0.42 percent higher at 6,931.55 following the ECB’s surprise move.
“Despite the reduction in the amount of asset purchases from April 2017, a somewhat longer than expected extension in the QE timeline (to the end of December) as well as the overall dovish tone of the press conference, suggest that the high level of monetary accommodation in the Euro area remains in place,” Anna Stupnytska, global economist at Fidelity International, told Reuters.

Today’s macroeconomic releases include Germany’s trade balance for October, due out at 07:00 GMT, to be followed by the UK trade balance for the same month at 09:30 GMT. IG reports that at home, deficit is expected to have dropped to £3.4 billion from £5.2 billion a year earlier. No blue-chips are set to update investors on their performance this Friday. In company news, Reuters reports that RBS has lost a court battle to withhold transcripts, notes and interview records from thousands of retail investors suing the bailed-out lender over its £12-billion share sale in 2008.

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