(Alliance News) - Stock prices in London were seen opening marginally higher on Monday, following record highs in the US on Friday, as attention shifts to a trio of central bank meeting this week, with an interest rate cut widely expected from the US Federal Reserve.
IG futures indicate the FTSE 100 index is to open 5.54 points higher at 7,554.60. The blue-chip index closed 60.01 points, or 0.8%, higher at 7,549.06 on Friday.
Wall Street enjoyed a strong session on Friday, with both the S&P 500 and Nasdaq setting new records following generally positive US company earnings, alongside the expectations of a US interest rate cut. The Dow Jones Industrial Average was up 0.2%, the S&P 500 up 0.7% and the Nasdaq Composite up 1.1%.
The US Federal Reserve's interest rate decision comes at 1900 BST on Wednesday, followed by a press conference with Fed Chair Jerome Powell at 1930 BST.
According to the closely watched CME FedWatch tool, economists currently forecast an 81% probability of a cut to US interest rates to 2.00% to 2.25% and a 19% chance of a cut to 1.75% to 2.00%. The current interest rate range is 2.25% to 2.50%.
London Capital Group's Ipek Ozkardeskaya said: "The Fed is heading toward an interest rate cut for the first time in a decade with a fifty-year low unemployment rate and above 2% GDP growth in hand. Moreover, nearly half of S&P500 companies released their second quarter results this far and their earnings surprised by 5.27% on the upside, meaning that the trade tensions did not hit the company earnings as badly as investors expected.
"Under these circumstances, a 25-basis-point cut from the Fed could be that reasonable 'preventive measure' to support the economy and to avoid a further slowdown in growth numbers amid ongoing US-China trade tensions, while a larger cut would be unnecessary at this point and could perturb the market."
The Japanese Nikkei 225 index is down 0.4% on Monday. In China, the Shanghai Composite is down 0.3%, while the Hang Seng index in Hong Kong is down 1.5%.
Asian equity markets were lower, with investors cautious ahead of US-China talks in Shanghai this week and amid more civil unrest in Hong Kong.
Two-day discussions begin on Tuesday with a Washington delegation led by White House Trade Representative Robert Lighthizer.
Ahead this week, the Bank of Japan and the Bank of England will make their own rate decisions, on Tuesday and Thursday respectively.
The pound was quoted at USD1.2363 early Monday, lower than quoted at USD1.2377 late Friday.
CMC Markets analyst Michael Hewson said: "The pound could well come under further pressure this week, ahead of the latest Bank of England rate decision and inflation report. No change is expected this week given the weakness seen in the economic data for April and May, which is likely to make the banks forecasts even more downbeat that they were in May. The ramping up of 'no deal' rhetoric and preparations over the weekend by new Prime Minister Boris Johnson and his cabinet, is unlikely to help sentiment and likely to reinforce concerns that the UK is on course to leave the EU without a deal at the end of October.
"Much is being made of the attempts by various MPs to prevent such a scenario from happening, with plenty of people claiming that parliament would prevent such an outcome. While that may be true, the only way that outcome can come about, is if MPs vote for a deal, or revoke article 50, something they have been so far been reluctant, or unable to do."
Ryanair Holdings reported early Monday that its first quarter operating revenue rose year-on-year but pretax profit fell due to increased costs.
In the period ended June 30, the Irish budget airline posted a pretax profit of EUR262.3 million, down 24% from GBP345.4 million. Operating revenue rose 11% year-on-year to EUR2.31 billion from EUR2.08 billion, however.
Still in the UK corporate calendar on Monday, are interim figures from insurer Hiscox, property firm Hammerson, as well as first quarter figures from meat company Cranswick.
On the earnings front this week, there are a host of household names reporting interim results in London, with oil major BP and British Gas parent Centrica on Tuesday, lender Lloyds Banking and insurer Direct Line on Wednesday, oil major Royal Dutch Shell on Thursday, and tobacco firm British American Tobacco also on Thursday. The week culminates with state-backed lender Royal Bank of Scotland on Friday.
Monday's economic calendar is quiet, but on Tuesday comes German consumer prices and US consumer confidence. On Wednesday is Chinese manufacturing data and UK manufacturing and consumer confidence as well as EU inflation, GDP, and unemployment figures.
On Thursday, as August gets underway, a slew of manufacturing PMIs are due from China, the EU, France, Germany, Ireland, Japan, and the US, while Friday has EU producer prices and the US monthly jobs report.
