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LONDON (Alliance News) - UK stocks are set to follow their US counterparts lower Wednesday as investors remain cautious ahead of the much-anticipated release of minutes from the latest Federal Open Market Committee meeting, as well as US CPI and retail sales data for October.
The DJIA closed down 0.1% Tuesday, with the S&P 500 closing down 0.2% and the Nasdaq down 0.4%.
"The main focus of attention today will be on the US and the Federal Reserve with the release of the latest FOMC minutes from October," says Michael Hewson, chief market analyst at CMC Markets.
"These minutes kept open the prospect of a taper by the end of 2013, and caught the market by surprise, because investors had been expecting a particularly dovish statement in light of the 16 day government shutdown," Hewson adds.
Investors will be looking at the minutes for clues as to the likelihood of a December taper.
Dovish comments from outgoing Federal Reserve Chairman Ben Bernanke overnight were not enough for stock futures to indicate a positive start to London trading. UK stocks are expected to open lower despite Bernanke saying that the US central bank would maintain its easy monetary policy for as long as was needed, adding that when the taper does begin, "it will likely be because the economy has progressed sufficiently."
Both IG and CMC Markets indicate the FTSE 100 to open lower at approximately 6,668 points.
US retail sales and CPI data for October also are likely to be in focus Wednesday. Retail sales are expected to show an increase to 0.1%, following on from a 0.1% decline in September. Consumer prices are expected to come in at 0%.
Also in the data calendar Wednesday, the minutes of the Bank of England's monetary policy meeting are due at 0930 GMT, headlining a light day for the European economic news.
"The minutes aren?t expected to garner any surprises as we got a lot of detail around the bank?s thoughts with last week?s inflation report, with respect to the bank's forward guidance and the prospects of an earlier rise in interest rates," says CMC's Hewson. "Nevertheless it would be prudent not to be complacent in the event that we get a slightly more hawkish tone from some on the committee," he warns.
In a much lighter corporate calendar Wednesday compared to recent trading sessions, FTSE 250-listed HICL Infrastructure Company and Utilico Emerging Markets, amongst others, have released interim results ahead of the London open Wednesday.
Barclays initiated the whole of the housebuilding index early Wednesday. Taylor Wimpey, Barratt Developments and Redrow have been initiated with an Overweight recommendation, while Bellway and Bovis Homes are rated as Underweight.
By James Kemp; jameskemp@alliancenews.com; @jamespkemp
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