London pre-open: Falls expected ahead of inflation report

8th Aug 2012 07:34

City sources predict the FTSE 100 will open down 35 points from yesterday's close of 5,841, putting an end to a two-week rally, although some analysts believe the falls could be short-lived after comments made yesterday by Boston Fed Bank President Eric Rosengren, who said he believes the central bank should bring about another bond-buying programme.Rosengren said the programme should be whatever size is deemed necessary in order to restore the economic situation, indicating that a more pro-active stance has been taken by some US policy makers. There is also caution ahead of the release of the UK inflation report, with the Bank of England expected to sharply reduce its growth forecasts. Also worth noting, overnight ratings agency S&P has downgraded its outlook on Greece´s debt rating due to doubts about whether the country will need greater aid. As well, there are increased worries regarding its ability to access the next installment of EU and IMF funds. This morning Bloomberg TV is to interview Peter Boffiger, adviser to German chancellor Angela Merkel, who is expected to argue in favor of the European Central Bank buying Eurozone periphery bonds. Periphery short-term sovereign debt yields (2 year) have seen a further bounce overnight. Of great interest, Reuters reports that the US Treasury Department and Federal Reserve were blindsided and angered by New York's banking regulator's decision to launch an explosive attack on Standard Chartered over $250bn (£160.1bn) in alleged money laundering transactions tied to Iran, sources familiar with the situation said.Currency headwinds were a problem for South African insurance group Old Mutual in the first half of 2012, as were falling interest rates, which hit investment returns. Profit before tax in the six months to the end of June fell to £733m from £909m in 2011. Adjusted operating profit on an international financial reporting standards (IFRS) basis rose 1% to £791m from £785m the year before, but was up 12% on a constant exchange rates basis.Defence technology group Cobham saw robust growth in its core businesses in the first half, but said that it is approaching 2013 'with caution', particularly as its order book slipped by over a fifth. Nevertheless, the firm hiked its interim dividend per share by 33% from 1.8p to 2.4p. Core revenues, which exclude Analytic Solutions (divested in November 2011) and Commercial Systems (divested in July 2012), increased by 6% from £773m to £817m, much better than the 1% core growth expected by Credit Suisse.South African platinum miner Aquarius Platinum described its last financial year as "exceptionally challenging", with wildcat strikes and the decline of the rand making life difficult for the company. The dividend has been sacrificed, as revenue fell 29% to $486m from $683m the year before and the company reported a loss before exceptional charges of $153m versus a headline profit a year earlier of $143m.