LONDON MARKET PRE-OPEN: Futures Point Up With China Closed For Holiday

LONDON (Alliance News) - London shares are set to open higher Thursday, getting a respite from the influence of Chinese stock markets, which are closed for holiday, with the focus instead on the European Central Bank rate decision due at 1245 BST and purchasing managers indices from several European countries and the US.

Markit services and composite PMIs for France and Germany are expected at 0850 BST and 0855 BST, respectively. The same for the eurozone are due at 0900 BST, while UK Markit services PMI is expected at 0930 BST.

According to FXStreet.com, economists expect the readings for France and Germany to come in unchanged at 51.8 and 53.6, respectively. While for the UK, with the services PMI having fallen by more than expected in July to 57.4, it is called for a slight recovery to 57.6 in August.

However, Lloyds Bank says that, given the recent increase in global economic uncertainties, "we think the risks are slightly to the downside and have pencilled in a marginal fall to 57.3."

The ECB is expected to announce Thursday that it has left interest rates on hold at their historic low, with the ECB's 25-member governing council expected to have kept the benchmark refinancing rate unchanged at 0.05%. However, weak inflation, renewed economic and market tensions have increased the pressure on the ECB to consider more action to shore up the eurozone economy, amid concerns about continued weakness in commodity prices.

However, CMC Markets Chief market analyst Michael Hewson believes that further measures are unlikely given the central bank's current QE program has been underway just for six months and has another twelve months ahead.

"There isn?t much central bank policy can do about falling commodity prices, which suggests that ECB President Mario Draghi will try to talk the euro lower simply because he can?t do much else," writes the analyst.

IG says futures indicate the FTSE 100 to open at 6,136.50 points, having closed Wednesday up 0.4% at 6,083.31.

On Wednesday after the London close, FTSE Russell confirmed that Berkeley Group Holdings will replace Weir Group in the FTSE 100 on September 21, after the completion on the index's quarterly review. Meanwhile, entering the FTSE 250 are Sophos, Circassia Pharmaceuticals and P2P Global Investment, while Lonmin, Premier Farnell and Fisher (James) & Sons are deleted from the mid-cap index.

Wall Street ended higher Wednesday. The DJIA closed up 1.8%, the S&P 500 ended up 1.8% and the Nasdaq Composite finished up 2.5%.

In Asia on Thursday, the Japanese Nikkei 225 closed up 0.5%, while Chinese stock markets are closed to mark the 70th anniversary of China's victory over Japan in World War II.

Among London stocks, UBS upgraded Wm Morrison Supermarkets to Neutral from Sell, while the bank cut Easyjet to Neutral from Buy.

Also Thursday, the budget airline upgraded its full-year profit guidance following a strong summer trading season. The FTSE 100 airline said its pretax profit for the financial year to the end of September is now expected to be GBP675 million to GBP700 million, up from its previous guidance of GBP620 million to GBP660 million.

easyJet said its strong revenue performance over the summer has more than offset any cost challenges it has faced this year, including the disruption across its network back in April, the fires which hit Rome Fiumicino airport, its GBP8.0 million one-off settlement with Eurocontrol, and costs associated with its higher load factors.

Meanwhile, Rio Tinto outlined the next phase of its plans to capitalise on the iron ore market "through a relentless focus on productivity and efficiency, technology, and people development" to drive down costs at its flagship Pilbara iron ore mine in Australia.

The FTSE 100-listed miner believes, despite a slowdown in China and considerably lower iron ore prices compared to a year ago, that steel demand across China and the rest of the world will grow at an average of 2.5% per year over the next 15 years.

Also in a busy economic calendar, eurozone retail sales are due at 1000 BST. In the US, Challenger job cuts data are due at 1230 BST, while continuing and initial jobless claims are expected at 1330 BST. US Markit services and composite PMIs are due at 1445 BST, while US ISM non-manufacturing PMI is expected at 1500 BST. EIA natural gas storage is due at 1530 BST.

By Daniel Ruiz; danielruiz@alliancenews.com

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