London pre-open: Yellen comments to drive strong start

14th Nov 2013 07:32

City sources predict the FTSE 100 will open around 50 points higher than yesterday's close of 6,630, with investors expecting welcome dovish comments from the soon-to-be Chair of the Federal Reserve Janet Yellen. Yellen, who is expected to take over from Ben Bernanke as the head of the Fed in January, said in prepared comments that the labour market and wider economy are performing "far short of their potential" with unemployment still too high.The gain would see the FTSE 100 recover from a four-week low registered at Wednesday's close, as investor risk appetite was scaled back after a more-hawkish-than-expected Inflation Report from the Bank of England (BoE). Following recent data which showed a sharp fall in consumer price inflation and declining unemployment, the BoE said that the 7% threshold for the jobless rate - the point at which it will begin to re-assess current monetary policy - could be breached a year earlier than previously planned. It also raised its economic growth assumptions for 2014 and 2015.Over in the US, stocks last night raced into positive territory, with both the Dow Jones Industrial Average and S&P 500 finishing the session at new record highs.On today's agenda will be Eurozone economic growth figures, with GDP for the third quarter expected to have risen just 0.1%, compared to the previous quarter's 0.3% gain.Evidence of slowing recovery might support European Central Bank President Mario Draghi's case for last week's surprise interest rate cut from 0.5% to 0.25%.At the time of the rate cut Draghi cited risks of deflation that would hamper economic growth.Back in the US, the spotlight will shine on Federal Reserve Vice Chair Janet Yellen, who will appear before the Senate Banking Committee before being expected to be confirmed as the new Chair to take over from Ben Bernanke. Yellen is President Barack Obama's choice to head the central bank. Back on this side of the pond, British Gas-owner Centrica this morning warned that market conditions had remained challenging for the group, particularly in business energy supply in both the UK and the US, in UK gas-fired power generation and in UK gas storage. It predicted 2013 adjusted earnings per share would be at similar levels to 2012. Burberry Group's first half profit rose as the luxury fashion maker's revenues reached a new high on the back of strong growth in retail. Adjusted pre-tax profit for the six months ended September 30th increased slightly from the prior year to £174m from $173m, above original guidance.FTSE 100-listed consumer packaging company Rexam said trading since the start of July has been in line with company expectations as Beverage Cans volumes rose. Overall global volumes in Beverage Cans were rose 3% in the third quarter as improved growth in Western Europe was partially offset by weakness in Russia and a difficult trading environment in Egypt and Turkey.NR