London pre-open: Ukraine, UK Budget in focus

19th Mar 2014 07:23

- Decent finish in US- Focus on UK Budget, MPC minutes, US FOMC- Ukrainian officer killed by Russian forces overnightThe City is expecting a broadly flat start this morning, with maybe a rise of just a few points early on as investors await a number of important economic announcements following a decent finish in the US overnight. Indices were helped by upbeat housing data and easing fears that Russia could ramp up its military presence in Ukraine, where Russian President Vladimir Putin said on Tuesday that Moscow has no plans to send its troops further into Ukraine after annexing Crimea.Following Sunday's referendum, which saw Crimean locals vote overwhelmingly to join Russia, Putin and other officials signed a treaty to accept the accession, defying sanctions imposed by European Union (EU) and US leaders yesterday who labelled the vote as illegal."Crimea is our common property and a very important factor in the stability of the region," he said. "This strategic territory should be under a strong, sovereign state and that in fact can only be Russia."While the market breathed a sigh of relief on Tuesday that Putin's speech did not lead to an escalation of conflict between the neighbouring countries, developments overnight are likely to keep tensions high after a Ukrainian officer was killed by Russian forces near the Crimean capital of Simferopol.Today's focus will also be very much on the UK Budget, with Chancellor George Osborne unveiling the government's spending and tax plans for 2014-15.The government has already announced that the personal income tax allowance will rise in April from £9,440 to £10,000 and is scheduled to increase in line with inflation from 2015-16 onwards.The national insurance contribution threshold for employees will rise from £7,755 to £7,956 while the upper earnings limit goes up from £41,450 to £41,865.The corporation tax rate will be cut from 23% to 21% and will go down again to 20% in April next year for companies that make more than £1.5m profits. The tax cuts come as the government tries to win favour ahead of the 2015 general election. On Sunday, Osborne also announced the government would extend by four years the 'Help to Buy' scheme to boost mortgage lending. Alongside the Budget, the Office Budget of Responsibility is anticipated to announce the largest annual upgrade to economic growth since the millennium. Elsewhere in the UK, the Bank of England will release the minutes of its last policy meeting. Reports on UK jobless claims, claimant count, employment change and the unemployment rate are also due out. In the US, the Federal Reserve will wrap up its two-day policy meeting. Analysts expect the central bank will slash monthly bond purchases by a further $10bn to $55bn and keep its benchmark rate at 0.25%. The meeting will be followed up with a press conference with Fed Chair Janet Yellen. Smiths Group posts smaller than expected profit declineIn this morning's company news, UK manufacturing firm Smiths Group reported a smaller-than-expected decline in adjusted profits in its first half, but warned that foreign exchange headwinds will increase towards the end of the year. The firm said that judging by current exchange rates, currency movements will have a 4-5% impact on earnings for the full year. Headline pre-tax profit for continuing operations, which excludes certain items, eased by 4% to £215m, slightly ahead of the consensus estimate of £211m. Unite has won planning approval to develop a new student property in Islington, London. The accommodation will include 900 beds and covers 260,000 sq ft at a cost of £93m and a yield on cost of 8.8%.Engineering and construction group Kentz Corp., this morning announced that Valerus, its oil and gas handling company in the US, has been awarded a contract from Cardón IV to provide engineering and procurement of a simplified early production plant in Venezuela. The $38m contract award follows a previously reported award in November last year for work on a gas conditioning and condensate stabilisation facility, also in Venezuela. Sales have continued on the same robust line from the previous year at Domino Printing in the four months to the end of February, although the recent strength of sterling has hit the top line. Underlying sales of 8% were trimmed to 5% at group revenue level from the adverse movement of currencies. The company reported improved market conditions compared to those experienced during 2012 and 2013, although "customer confidence remains fragile in some geographic areas".NR