London pre-open: FTSE to decline after stimulus cut and Chinese data

30th Jan 2014 07:07

- Fed reduces stimulus by 10bn dollars- China confirms fall in PMI- Eurozone confidence data due City sources predict the FTSE 100 will open 17 points below yesterday's close of 6,544.28 following the news the Federal Reserve has, as was widely anticipated, continued with its plan to reduce stimulus.Also knocking sentiment lower was disappointing data from China and expectations for the raft of data due out from across the globe later on today. US policymakers tapered quantitative easing (QE) for the second month in a row despite some suggestions that the recent volatility in emerging markets could prompt the central bank to hold off.The Federal Open Market Committee (FOMC) decided to cut its monthly asset purchases by a further $10bn to $65bn after finding that economic growth had "picked up in recent quarters".The news came after a significant rate hike in Turkey, although the resulting rally was, as one analyst described it, "extremely short-lived". Markey Analyst at Alpari UK, Craig Erlam, said the absence of a longer-lasting rally "clearly highlights just how pessimistic investors are right now". He continued: "In terms of what's going to move markets today, already we're seeing the Fed's decision to taper last night and the disappointing Chinese data weighing on European futures [...] There's plenty of European data being released this morning which could act as a distraction to what's going on in the emerging markets and the US."The final reading for January PMI in China confirmed a contraction, and was revised slightly lower to 49.5 after being hit by weaker expansion in both new business and output. Spain is set to report its flash fourth quarter GDP reading, due to show growth of 0.3%. Also on the cards is Eurozone confidence for January, which is expected to have strengthened. Erlam commented that while this would clearly be positive, investors should still be "a little concerned that the majority of these improvements are being driven by the stronger economies", and that "we also shouldn't be distracted by numbers that don't necessarily reflect the sentiment in many of the countries in the euro area". It will be a busy session in the US, with weekly jobless figures, pending home sales and personal consumption expenditure prices all due to be released. In this morning's company news, Royal Dutch Shell's Chief Executive said the oil giant will undergo a major restructuring to boost capital and cut costs as the company reported a fall in fourth quarter earnings. Ben van Beurden, who took over the helm at the start of this year, has announced plans to reduce investments, sell off assets and begin new projects in an effort to improve the group's financial position.Satellite broadcaster BSkyB announced an 8% rise in revenue to £3.75bn, but blamed investment in on-demand TV services and higher costs of Premier League football rights for flat profits of £813m.Water operator United Utilities said trading since October has been in line with its expectations and it remains confident of delivering a good underlying full-year performance. The FTSE-100 group added that it is ahead of schedule in meeting its 2010-15 regulatory outperformance targets.Neil Carson, the long-running boss of chemicals and precious metals firm Johnson Matthey, is to step down this summer and will be replaced by the current Finance Director Robert MacLeod. The news came as the group gave an upbeat outlook for the second half of its financial year, saying that its performance will be ahead of previous expectations.NR