London pre-open: FTSE to fall early on amid Fed speculation, Tesco in focus

9th Dec 2014 07:44

Stocks are expected to suffer a drop early on in Tuesday's session following suggestions the Federal Reserve could next week withdraw its commitment to low interest rates.City sources predict the FTSE 100 will open around 40 points lower than Monday's close of 6,672.15."For a long time, the Fed has committed itself to keeping rates close to zero for a 'considerable time' after the end of its third quantitative easing programme, which was brought to an end in October," Alpari market analyst Craig Erlam explained."[Recent data] would suggest that the Fed has achieved its goals and can therefore look to moving interest rates away from record lows, with many people concerned about the impact such a long period of low interest rates could have going forward."Tuesday's declines also come after crude prices dropped to five-year lows, trading off by 4.42% to $62.89 per barrel on the NYMEX on Monday evening.Investors will also be feeling a little cautious following the news Greece has brough forward its presidential elections by two months, meaning they will now take place this month, potentially triggering a snap election."This would be a disaster for the country as it finally nears the end of the bailout, with [the] Syriza [party] wanting to reverse a lot of the work that has been done between Samaras' government and its lenders which would put the remaining bailout payments and any future deals into jeopardy and risky destroying any confidence that has been built up in the financial markets," said Erlam.In the UK, data is expected to show that industrial production has risen 1.8% in October following a 1.5% increase a month earlier, according to analysts' forecasts.Analysts also predict a report will show manufacturing production climbed 3.2% in October after a 2.9% gain the previous month.Elsewhere in the UK, the NIESR releases its latest gross domestic product estimate, while the British Retail Consortium unveils November sales figures.Stateside, the focus will be on the release of NFIB's Small Business Optimism index which is expected to rise to 96.5 in November from 96.1 the prior month amid signs of growth in the world's biggest economy.In company news, struggling supermarket chain Tesco released an unscheduled trading statement, guiding to at least a 58% drop in trading profits for the full year. The company said that on the back of changes and investments made so far this year to improve customer service and implement new procedures, trading profit for the financial year ending February 2015 is not expected to exceed £1.4bn. This compares with a trading profit of £3.315bn previously and analysts' forecasts of £1.8bn-2.2bn.Astrazeneca announced that Moventig, its treatment for adults with opioid-induced constipation, has been granted marketing authorisation by the European Commission for patients who have had an inadequate response to laxatives. The drug is the first drug of its kind to be approved in the European Union.