LONDON (Alliance News) - UK shares are set to open cautiously Thursday after US markets made further gains Wednesday, with the S&P 500 posting another record close. Global inflation will be in focus throughout the day, with CPI data due from Europe and the US.
Spredbetters are calling the FTSE 100 to open marginally higher at 6,820.00.
Following a global stock rally on Wednesday, sparked by an upgrade from the World Bank of its global growth forecast to 3.2% from 3.0%, US stocks continued to gain after the European market close, as the Federal Reserve's Beige Book, issued late Wednesday, gave no cause for concern.
Two-thirds of the 12 districts involved in reporting current economic conditions in the US reported increases in hiring, with most districts expecting the "more of the same" into the new year. Three-quarters of the Districts indicated that retail activity had increased since the last Beige Book report. All Districts reported year-over-year increases in manufacturing activity.
The reassuring report adds to recent strong US data and points to a continuation of "tapering", as Federal Reserve officials must decide whether the economy is expanding at a strong enough pace to warrant scaling back its quantitative easing program for a second month in a row.
Also adding to the positivity for global stocks, International Monetary Fund Managing Director Christine Lagarde said global growth momentum should strengthen further in 2014, largely due to improvements in advanced economies. "The world economy had avoided a worst case scenario, thanks to the efforts of global policymakers over the past half decade," she said during remarks at the National Press Club in Washington.
Data already released Thursday has shown UK house prices continuing to rise, although slightly less than expected. The latest survey from the Royal Institution of Chartered Surveyors showed the house price balance at 56%, down from the reading of 58% in November and slightly less than the 60% forecast by economists.
European inflation is in focus Thursday morning, with CPI data from Germany already released showing consumer prices unrevised, rising at 0.4% month-on-month and 1.4% year-on-year in December. The readings were in line with economists expectations and, encouragingly, the yearly figure remains slightly higher than the 1.3% seen in November.
With deflationary pressure still of concern in the euro region, all eyes will be on the eurozone CPI release at 1000 GMT. Economists expect consumer prices to have risen by 0.3% month-on-month, up from a reading of negative 0.1% in November. On a yearly basis, prices are expected to be rising at 0.8%, slightly slower than the 0.9% seen in November.
Also this morning, the European Central bank will publish its monthly report of current economic conditions at 0900 GMT.
There is no macro data from the UK Thursday, so the focus will switch to the US in the afternoon where CPI data is also due for release at 1330 GMT. Price are seen by economists as rising at 1.7% year-on-year in the US. Due at the same time, initial jobless claims are expected to have reduced slightly to 328,000 for the week ended January 10 from 330,000 previously.
A busy day in the UK corporate calendar Thursday sees interim management statements from Halfords, Experian, Aberdeen Asset Management and Home Retail Group. Trading statements are also already out from Ladbrokes, Dixons, Bovis Homes and Premier Oil.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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