London pre-open: FTSE set for modest rise following strong US data

18th Oct 2012 07:31

City sources predict the FTSE 100 will open up 10 points from yesterday's close of 5,911, boosted by the release of much stronger than forecast US data on construction starts, which showed a rise to a four-year high. Housing starts rose 15% in September to an annualised rate of 872,000 units, comfortably ahead of market expectations of 770,000. However, some economists are warning that this series is still far below its historical average of 1.5m starts. Barclays Research for their part, however, are of the following opinion: "This report provides further evidence for our view that a broader housing recovery remains firmly in place ... We continue to expect residential investment to be a tailwind for GDP growth in the coming quarters, as it has in the previous five." Dampening spirits, on the tech side of things chip maker Intel and mainframe computing titan International Business Machines (IBM) both came under pressure after they issued underwhelming results.UK Retail Sales figures for September are due out at 09:30, and the expectation in the market is that the index will be up 0.4% month-on-month, after falling 0.2% in August. On a yearly comparison, sales are expected to be up 2.1%, after showing an annual rise of 2.7% in August. Chinese GDP data out overnight has come in as expected, revealing a 7.4% year-on-year rate of expansion in gross domestic product (GDP). In quarterly rates of change nevertheless the economy expanded at a 2.2% clip, after 1.8% in quarter two. Furthermore, the latest industrial production and retail sales data have come in ahead of expectations. Also on the cards today are Internet Retail Sales and trends in lending data, both of which are also expected at 09:30.In company news, Britvic, the soft drinks firm in merger talks with Irn Bru maker AG Barr, saw full year underlying revenue decline a touch, primarily because of the recall of its Fruit Shoot products. Revenue in the year to September 30th totalled £1,256.4m, down 0.8% on a constant currency (CC) basis and 2.6% on an actual exchange rates basis. The fourth quarter saw group revenue decline by 4.9%, or 1.9% on a CC basis.Lager brewer SABMiller saw good growth in lager volumes shipped across most regions in the first half of its financial year. On an organic basis, lager volumes for the six months to the end of September were 4% ahead of the prior year. Soft drinks volumes were 6% higher year-on-year on an organic basis. Overall, financial performance for the half year was in line with management's expectations, and a touch better than the 7.5% organic revenue growth expected by Credit Suisse. EVRAZ, the steel, mining and vanadium group, saw production decrease in the third quarter while prices were hit by tough conditions in global steel markets. Consolidated crude steel production in the three months to the end of September fell by 3% compared with the preceding second quarter and the same quarter of last year due to lower production at its Vitkovice Steel operations in the Czech Republic and Highveld in South Africa.Despite the threat of higher government taxes in the African countries in which it mines for gold, Rangold Resources has a strong investment case, argues Questor in The Telegraph. The miner expects to produce about 845,000 ounces of gold this year, up from 700,000 ounces last year. Indeed, analysts have pencilled in a one-third rise in earnings per share in 2012 and a 30% increase in 2013. As its price tracks that of gold, the question is can gold move higher? Bill Goss of Pimco and HSBC think it will. Indeed, HSBC thinks gold will rally to $1,900 an ounce by the year end. Trading on an earnings multiple of 23 in the current year, falling to 17 in 2013, the shares remain a buy.Analysts at Goldman Sachs have downgraded shares of Shell to sell from neutral this morning.