London pre-open: FTSE to follow US stocks higher after long weekend

26th Aug 2014 07:45

London-listed stocks are set to track the strong gains seen in the US on Monday night as trading resumes after the long bank holiday weekend. City sources predict the FTSE 100 will open around 32 points higher than Friday's close of 6,775.25.Monday's session saw the S&P 500 at one point edge past the psychologically significant 2,000 point mark for the first time ever following what was seen by some as a somewhat hawkish speech from Janet Yellen at the Jackson Hole symposium of central bankers. Speaking to her audience the Fed chair said that if unemployment continued to decrease more quickly than expected then the central bank might have to raise rates sooner than is currently priced into financial markets."While the focus was on a less dovish than expected speech from Janet Yellen, which helped to push the US dollar higher, it was the President of the European Central Bank, Mario Draghi who stole the limelight and the headlines with a speech that appeared to hint at the prospect of some form of quantitative easing in the coming months," Michael Hewson, chief market analyst at CMC Markets UK, said. Draghi's speech indicated he had concerns about expectations for inflation and said flexibility was needed in fiscal policy. "Despite these political concerns and yet another poor German IFO business confidence survey yesterday, European stock markets rose sharply on Monday as markets looked to price in the prospect of further policy easing by the ECB in an attempt to try and boost economic growth in the euro area. In this context the FTSE 100 is expected to open higher this morning as it plays catch up with Europe's advance from yesterday."UK service firms endure slowest growth in a yearThe UK services industry slumped to its slowest growth in a year in the last three months, according to a survey out on Tuesday.Business volumes in the three months to August rose at their weakest rate since the same month in August 2013, the latest Services Sector Survey from the Confederation of British Industry (CBI) showed.About 43% of firms said volumes were up compared with three months ago, and 17% said they were down, giving a balance of 25%.In company news, British Land has let a further 36,000 square foot (sq ft) at Wheatley Retail Park in Doncaster after Next and Marks & Spencer Simply Food agreed terms for two new units. Next is to upsize to a 23,518 sq ft with a full cover mezzanine floor, on a 15-year lease, whilst Marks & Spencer Simply Food will open its first store at the park, taking a 12,502 sq ft unit. Bus and rail operator Stagecoach reported higher revenue across its businesses, particularly its UK bus networks, and said it was on track to hit annual targets despite facing "a number of challenges" in increasing profit. Stagecoach said its UK regional buses boosted revenue by 4% in the 12 weeks to 20 July, although like-for-like passenger volumes rose by just 0.9%. Oil and gas explorer Petrofac saw revenues decline to $2.5bn over the six months ended on 30 June. Operating profits on an EBITDA basis were off by 16% to $340m. Engineering, construction, operations and maintenance (ECOM) order intake stood at $7.2bn for the first half, raising the backlog 35% to $20.3bn, "giving very good revenue visibility for the rest of the year", the company said.NR