London pre-open: Markets seen lower after German elections

23rd Sep 2013 07:35

Markets are expected to open slightly lower on Monday morning as investors digest this weekend's elections in Germany along with the uncertain outlook for monetary policy in the US. City sources predict the FTSE 100 will open down around eight points from Friday's close of 6,596.43.German Chancellor Angela Merkel's CDU/CSU party won 41.5% of the vote in the federal elections this weekend after winning 311 seats in the Bundestag, four seats shy of an absolute majority. However the current coalition partner, FDP, missed out of the 5% minimum threshold and will not be represented in parliament."Despite Merkel winning her third term at the helm of Europe's biggest economy, the votes came in slightly short of an overall victory. It will now be up to Merkel to convince leftist rivals to join a coalition government," said Financial Sales Trader Lee Mumford from Spreadex. Stocks gained strongly in the aftermath of last Wednesday's surprise decision by the Federal Reserve not to begin scaling back stimulus. However, gains were mostly erased by the end of the week after one policymaker assured that a 'taper' is still on the cards and could come at any point.James Bullard, head of the St Louis Fed, admitted that this month's decision to maintain quantitative easing was a close call and that the central bank could still trim asset purchases at its next meeting. He said: "it's possible you could get some data that change the complexion of the outlook and could make the committee be comfortable with a small taper in October."Stocks to watchInvestment group Aberdeen has seen a slight drop in assets under management (AuM) in the fourth quarter due to "considerable" volatility across financial markets, but said that underlying profits should still come in at the higher end of analysts' forecasts. AuM declined from £209.6bn to £201.7bn during the two months to August 31st (fiscal year-end: September 30th). The firm said that the first two months of the fourth quarter have been "difficult for the whole asset management sector".Centrica has decided it will not proceed with its Baird and Caythorpe gas storage projects amid a challenging market. The company said it won't go ahead with its new-build gas storage project at Baird in the UK Southern North Sea and will put its project at Caythorpe in East Yorkshire on hold indefinitely due to "weak economics for storage projects and the announcement by the UK government on September 4th ruling out intervention in the market to encourage additional gas storage capacity to be built".Dairy foods company Dairy Crest said it continues to perform in line with company expectations, despite the challenging trading environment, and profit targets for the full year remain unchanged. In an update for the six months ending September 30th, it said sales of its four key brands are together likely to be broadly the same as they were in the corresponding period last year when they grew by 11%.BC