London pre-open: FTSE set for strong start after Fed meeting minutes

9th Oct 2014 07:46

The FTSE is in line for a strong start following a positive reaction in the US to the minutes of the latest Federal Reserve meeting.City sources predict the FTSE 100 will open around 63 points higher than yesterday's close of 6,482.24.The gains also come after Aluminum producer Alcoa unofficially kicked off the third-quarter US corporate earnings season overnight, reporting a rise in operating earnings to $245m for the latest three months, versus $8m a year ago.Wednesday's session saw the release of the minutes from the Fed's 16-17 September policy meeting, according to which officials are worried that disappointing growth in Europe, Japan and China could damage US exports.Partly because of such concerns, Fed officials reduced their projections for medium-term growth, with the collective worry another reason for the Fed to hold interest rates near zero in the short term, even in the event of an improvement in the economy."European futures are pointing to a very strong start on Thursday, with most major indices seen opening more than 1% higher after even larger gains were made in the US overnight," said Alpari market analyst Craig Erlam."You would imagine that gains of this nature would come off the back of some pretty significant news but in fact, it's just another sign that the markets are acting very irrationally at the moment."In the UK, data out Thursday morning showed that the rate of shop closures in the UK declined in the first six months of 2014, a joint-study by Pricewaterhouse Coopers (PwC) and Local Data Company (LDC).The gap between closures and openings, however, has doubled, with net closure levels for the first half of 2014 higher than the annual total for 2013.The report, which analysed 500 town centres across Britain, added that building societies, women's clothing and mobile phone shops were the worst hit, while betting shops, coffee shops and bank outlets proliferated."I expect to see multiple retailers continue to approach openings in town centres very cautiously. This is likely to mean shorter-term leases and more temporary pop up type formats particularly in secondary locations," said Mike Jervis, insolvency partner and retail specialist at PwC."The overall drop in store openings may look surprising given UK growth prospects but at a macro level, it is most influenced by shifts in retail business models from purely high street to multi-channel."In company news, polymer products group Victrex said it made a "strong finish" in the 12 months to 30 September, with growth momentum continuing as it started the new financial year. The company, whose strategic markets comprise automotive, aerospace, energy, electronics and medical, said that full-year group sales volumes increased by 22% to 3,551 tonnes. Second-half sales volumes alone increased by 29% to 1,967 tonnes.While interim results were in line with reduced expectations, clothing retailer N Brown lowered guidance for full year profits after the second half started weakly. The board now expects the pre-tax profits of between £88m-£92m, before expected reorganisation costs of around £5m.Oil services supplier Wood Group forecast an annual performance in line with hopes and ahead of 2013 thanks to growth in its PSN production services arm, particularly from the Americas and higher-margin US shale gas.