LONDON (Alliance News) - London share prices are set to open higher Monday, following the news that China's central bank on Sunday lowered the amount of cash financial institutions are required to hold as reserves, in order to provide some stimulus after disappointing Chinese economic data last week.
IG says futures indicate the FTSE 100 to open 19.4 points higher at 7,014.0. The index ended Friday down 0.9% at 6,994.63, meaning it fell 1.3% for the week as a whole. The index closed below the 7,000 mark for the first time since April 9 amid a broader equities sell-off across Europe and the US.
"As we head into a new week we could well get a positive boost from the weekend's decision by the Chinese central bank to enact further easing measures after last week?s disappointing economic data for March. A cut in the reserve requirement ratios to 18.5% from 19.5% is the latest measure this year to help oil the wheels of the slowing Chinese economy, and was a much larger reduction than many in the market had been expecting," says Michael Hewson, chief analyst at CMC Markets UK.
As Chinese state media reported, the reserve requirement ratio reduction by 100 basis points, or one percentage point, goes into effect on Monday. Announced Sunday, it was the biggest such cut since the financial crisis and the second reduction this year, and was taken to introduce stimulus measures to meet its annual growth target of 7% after quarterly gross domestic product was reported last week dropped to its slowest rate of growth in six years.
The central bank last lowered the ratio by 0.5 percentage points in February, which was the first reduction since May 2012. The latest move was intended to make available more funds for banks for lending and to divert funds to productive sectors.
Asian stock markets are trading lower Monday, with the Japanese Nikkei 225 closing down 0.1%, the Hang Seng trading down 2.1% and the Shanghai Composite down 1.8%.
Wall Street ended lower Friday. The DJIA closed down 1.5%, the S&P 500 ended down 1.1% and the Nasdaq Composite finished down 1.5%.
Brent crude is quoted at around USD64.20 a barrel Monday, and US benchmark West Texas Intermediate is quoted at USD56.56 a barrel. Gold is quoted early Monday at USD1,205.31 an ounce.
In the UK, the average asking price for a house was up 1.6% month-on-month in April, property tracking website Rightmove said on Monday, coming in at a record GBP286,133. That follows a 1.0% increase in March. On a yearly basis, house prices climbed 4.7%, slowing from 5.4% in the previous month.
FTSE-250 listed Petrofac Monday said it will book a further GBP130 million pretax loss on its Laggan-Tormore gas plant project on Shetland in the UK, blaming weather-related delays, an issue with a sub-contractor, lower worker productivity and the requirement for more work than it had previously expected.
The oil and gas services company had booked a USD230 million loss on the project in its 2014 results and had said it expected that it wouldn't have to book any further losses over the remainder of the contract, which it expected to complete in the third quarter of 2015. However, as activity ramped up in March and April, it became clear that the project was going to require more work than it had previously expected, it said Monday.
St. Modwen Properties has appointed British Land Group Financial Controller Robert Hudson as its next group finance director, and he's set to start by October. Hudson, aged 41, is a chartered accountant who began his career with PricewaterhouseCoopers before moving to Experian in 2000 where he held a number of senior financial roles, including global finance director of its Decision Analytics business and UK finance director.
Meanwhile, the UK's Conservative party on Sunday confirmed plans to allow retail investors to buy up to GBP4 billion worth of shares in Lloyds Banking Group if the party wins the country's upcoming general election. Writing in the Sunday Telegraph, Chancellor George Osborne said the retail offer would be launched within one year of the election and include a loyalty bonus of one share for every ten held for a year to encourage people to adopt a long-term approach to ownership.
By Daniel Ruiz; danielruiz@alliancenews.com
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