London pre-open: Employment report, US Fed minutes in focus

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London pre-open: Employment report, US Fed minutes in focus

Wed, 16 August 2017
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London pre-open: Employment report, US Fed minutes in focus

(ShareCast News) - Stocks are seen starting the session a tad higher ahead of the release of the August employment report and, later in the day, the minutes of the US central bank's most recent policy meeting.

The Footsie was being called to start the session seven points higher to 7,390.

Both reports were expected to give investors more clues regarding the outlook for monetary policy both here and on the other side of the Pond in the very near-term, although recent events on the Korean peninsula might yet muddy the waters.

In particular, some economists were hoping for a better indication on when the Federal Reserve might be most inclined to begin the process of 'normalising' its balance sheet.

Nonetheless, for now the consensus view appeared to be that infuriatingly low levels of inflation were expected to restrain attempts at policy tightening by the world's central bankers.

Commenting on the market backdrop, Michael Hewson, chief market analyst at CMC Markets UK, "The US dollar enjoyed another decent day yesterday moving to a three-week high after a strong rebound in retail sales for July, as well as a strong Empire manufacturing survey for August which showed activity at its best levels in nearly there years. While encouraging, these numbers can't disguise the fact that inflationary pressures still remain weak."

On the economic calendar for Wednesday, at 0930 BST ONS was scheduled to release unemployment and average weekly earnings for the three months to June, followed by the minutes of the last Fed meeting at 1900 BST.

Euro area second quarter GDP data was expected from Eurostat at 1000 BST; the possibility existed that the preliminary reading of quarter-on-quarter growth of 0.6% might be marked down to 0.5%.

An 8% jump in net revenues to £550m drove a 2% rise in statutory profits before tax of £193m at Admiral over the six months ending on 30 June. In parallel, the number of UK insurance customers increased 11% to 4.34m alongside a 27% jump in international car insurance clients to 961,200. Post dividend, the motor insurer's solvency ratio stood at 214%, up from 180% for the comparable year-ago period. Earnings per share were also improved, increasing 3% to 57.3p. Meanwhile, the interim dividend was raised by 10% to 56.0p.

Prudential has offloaded its US independent broker-dealer network for a fee that could rise to $448m as the life insurer looks to trim the fat. After the deal was signed off overnight and announced on Wednesday, the transition is expected to be completed by the end of the first quarter of 2018.

Construction outfit Balfour Beatty swung to a first half pre-tax profit of £12m from a loss of £15m last year as its more selective bidding approach started to yield results. However, chief executive Leo Quinn warned that Brexit and the weak pound it has caused were likely to reduce migrant labour at a time when a growing pipeline of major projects is likely to increase demand for skilled workers.