London pre-open: Small gains expected ahead of ECB, BoE decisions

6th Mar 2014 07:14

- Modest rise expected at opening bell- Attention focused on ECB, BoE, Ukraine- Positive passenger numbers from easyJetUK stocks are set to edge higher early on ahead of announcements from both the European Central Bank (ECB) and Bank of England (BoE) regarding their latest policy decisions. City sources predict the FTSE 100 will open 11 points above yesterday's close of 6,775.42.The ECB has been under mounting pressure to address low inflation and high unemployment in the Eurozone. ECB President Mario Draghi has said the current rate of inflation, at 0.8%, was well below the 2% target and remain low for a "protracted period of time".Unemployment also remains at a 12%. Last month Draghi hinted at the possibility of enacting greater measures, saying he was awaiting more comprehensive data in March before making a decision.Economists are mixed on whether the ECB will take action."While the firmer-than-expected euro area February inflation data reduced the market expectation for ECB action at this meeting, our economists continue to expect them to announce further easing by cutting refi rate by 15bp to 0.10% and the deposit rate by 10bp to -0.10% on the back of growing risk of a very prolonged period of low inflation," according to Barclays. "While we think this will be a very close call, a combination of refi rate cut and negative deposit rate would likely trigger a knee-jerk EUR selling, in our view."However, analysts at Bank of America Merrill Lynch believe that the ECB is likely to hold fire until later meetings: "In our view, the ECB is not ready to fire a 'bazooka' in this week's meeting, despite very low inflation and rising deflation risks."[...] Looking ahead, we believe that the ECB is not worried about deflationary risks yet. However, the ECB might be pushed into action at the April meeting, or this summer, if inflation falls further," they said.The BoE is expected to maintain its policy by keeping interest rates at 0.5% and asset purchases at £375bn when the central bank meets tomorrow. Governor Mark Carney last month switched the Bank's forward guidance on interest rates. Meanwhile, attention will still be focused on the situation in Ukraine, although the geopolitical tensions in eastern Europe eased after Putin said he saw no need yet to send troops into Ukraine as the situation had "dissipated", adding that soldiers would only be deployed in an extreme case.easyJet posts positive February passenger numbersBudget airline easyJet posted a 2.9% year-on-year rise in the number of passengers it flew during February to 4.2m, together with a 0.2 percentage point increase in the load factor to 90.7%. On a 12-month rolling basis, February numbers were up 3.5% at 61.6m, from 59.5m a year earlier. The load factor was up 0.2 percentage points at 89.4%. Engineering group IMI said it expects modest organic revenue growth in 2014 after a "significant year of process" last year. The company, which is now a specialist industrial flow control company after the disposal of its Beverage Dispense and Merchandising divisions, said revenues from continuing operations rose 3% to £1,744m in 2013, up 1% on an organic basis.FTSE 100 temporary power group Aggreko reported annual earnings in line with company expectations in what it described as a 'challenging year.' The generator hire specialist said it suffered weaker market conditions in its Power Projects business and traded against exceptionally strong 2012 comparatives. Nevertheless it said it made an encouraging start to 2014.Insurer Aviva's turnaround under Chief Executive Mark Wilson saw encouraging progress with 2013 results exceeding most analysts expectations. Operating profits were up 6% to £2.05bn, well ahead of consensus forecasts, with Wilson's focus on cash driving the remittance ratio much higher to lift cash remittances 40% to £1.27bn and enabling the full year dividend to beat forecasts at 15p per share.NR