UK stocks were trading cautiously on Monday morning ahead of the official start of US corporate earnings season. However, markets were registering slight gains after dovish comments from a member of the Federal Reserve Stateside.
Federal Reserve Bank of Chicago President Charles Evans said that the government should put "in place policies that slowly but surely bring the prospects of future revenues into balance with future spending". He said that "monetary policy has an important contribution to make".
Market analyst Michael Hewson from CMC Markets said this morning: "Given these comments investors will be looking ahead to this evening's speech by Fed Chairman Ben Bernanke for further clues as to the longer term bias of US policy on easing in light of last week's surprise disclosure of a three-way split on the Federal Open Market Committee (FOMC) with respect to the duration of asset purchases."
Meanwhile, following on from Wells Fargo's results on Friday, the market is now awaiting results from other heavyweight peers this week, including Goldman Sachs, Morgan Stanley, JPMorgan and Bank of America.
Alpari market analyst Craig Erlam said: "With earnings expectations so low for the fourth quarter, it's difficult to see how the banks can disappoint. Earnings estimates have already dropped significantly in the past couple of weeks, which surely leaves any surprises firmly to the upside."
FTSE 100: Schroders leads financials higher
Asset management group Schroders was on the up after positive comments from JPMorgan Cazenove. The broker raised its target price for the stock from 1,882p to 2,556p, saying that despite a strong year in 2012, "the rating of the sector remains relatively modest by historical standards, especially if we further adjust for estimated surplus cash and cash generation in the current year".
Other financials, such as Lloyds, Resolution and RBS were also in demand.
Mining giantENRC was among the risers after Credit Suisse upgraded the stock from 'neutral' to 'outperform' and hiked its target price from 350p to 400p. The broker said that its previous cautious stance in the second half of 2012 was due to concerns over earnings, balance sheet and M&A. "We think downside risks are now limited with potential re-rating catalysts in 2013."
Security solutions group G4S was also making gains after Credit Suisse raised its recommendation from 'neutral' to 'outperform' and lifted its target price from 275p to 330p. "The current price does not reflect the organic growth potential, driven by New Markets, of the group, its ability to add value via acquisitions nor its improving prospects within the UK market," the broker said.
By contrast, Associated British Foods was feeling the effects of a downgrade by Nomura from 'buy' to 'neutral', while Sage was falling after Barclays cut the stock from 'equal weight' to 'underweight'.
Oil giant BP was down after taking legal steps to cut the civil damages it faces for the Deepwater Horizon disaster by up to $3.4bn. The firm has asked a New Orleans court hearing the case against it for civil penalties and damages to rule that at least 810,000 barrels of oil had been captured during the spill and it should not be fined for them.
FTSE 250: New World cautious about 2013
Coal and coke producer New World Resources was a heavy faller after warning that as a result of recent declines in energy demand and broader market conditions, thermal coal inventories have been above the historical average levels. These conditions are likely to create pricing volatility and continued downwards pressure on thermal coal prices in the near term, it said.
Pubs group Greene King was slightly higher after seeing record Christmas Day trading which underpinned growth in like-for-like sales.
Drinks peers AG Barr and Britvic were broadly flat after saying that they will have to wait until at least February to see if their merger will get the thumbs up from the regulator as the Office for Fair Trading (OFT) continues to probe the deal.
FTSE 100 - Risers
Schroders (SDR) 1,870.00p +2.80%
Eurasian Natural Resources Corp. (ENRC) 331.10p +2.63%
Lloyds Banking Group (LLOY) 55.36p +2.44%
Resolution Ltd. (RSL) 267.00p +2.38%
Royal Bank of Scotland Group (RBS) 368.40p +2.22%
Petrofac Ltd. (PFC) 1,709.00p +1.85%
GKN (GKN) 243.60p +1.80%
Carnival (CCL) 2,461.00p +1.74%
Aberdeen Asset Management (ADN) 397.80p +1.61%
G4S (GFS) 271.90p +1.57%
FTSE 100 - Fallers
Associated British Foods (ABF) 1,506.00p -1.57%
Sage Group (SGE) 309.60p -1.28%
Wood Group (John) (WG.) 791.00p -1.25%
Kazakhmys (KAZ) 799.00p -1.18%
Marks & Spencer Group (MKS) 368.60p -1.05%
Aggreko (AGK) 1,762.00p -1.01%
GlaxoSmithKline (GSK) 1,370.00p -0.90%
Intertek Group (ITRK) 3,074.00p -0.84%
ARM Holdings (ARM) 863.00p -0.80%
Polymetal International (POLY) 1,149.00p -0.78%
FTSE 250 - Risers
Centamin (DI) (CEY) 59.95p +7.44%
ITE Group (ITE) 250.60p +3.98%
Supergroup (SGP) 601.00p +3.62%
JD Sports Fashion (JD.) 704.00p +3.45%
Lonmin (LMI) 327.30p +2.60%
Marston's (MARS) 128.00p +2.40%
Bovis Homes Group (BVS) 632.50p +2.02%
Domino's Pizza Group (DOM) 524.00p +1.95%
Invensys (ISYS) 350.30p +1.95%
Redrow (RDW) 174.00p +1.81%
FTSE 250 - Fallers
Imagination Technologies Group (IMG) 440.00p -5.36%
New World Resources A Shares (NWR) 304.60p -4.00%
Fenner (FENR) 400.80p -2.48%
Big Yellow Group (BYG) 363.00p -2.26%
Diploma (DPLM) 548.00p -2.14%
Spirent Communications (SPT) 153.00p -1.92%
African Barrick Gold (ABG) 358.70p -1.89%
Perform Group (PER) 388.00p -1.77%
National Express Group (NEX) 213.80p -1.66%
Mitchells & Butlers (MAB) 314.50p -1.63%