The week is set to get off to a positive start for UK stocks, following a mixed picture in Asia overnight and a decent finish in the US on Friday. The Dow Jones Industrials managed to set a fresh record high, although the 16,000 point area continues to act as resistance for now.
City sources are predicting the FTSE 100 will open around 20 points above Friday's close of 6,814.57, ahead of a data-heavy week for macro, with the Bank of England inflation report, UK unemployment and average earnings figures all due out.
The Nikkei-225 finished 0.65% lower at 14,149.52 on Monday. The Shanghai Stock Exchange Composite index on the other hand was rising 2.01% to 2,051.60 as of 08:54. Chinese President Xi Jinping said the country must adapt to a new normal of slower growth. However, he added that the authorities must avoid risks and adopt "timely countermeasures to reduce potential negative effects," Xinhua reported.
BoE may hike rates sooner than expected, CBI now says
This morning business leaders warned that while Britain's economy should expand by more than expected this year, lawmakers risk derailing the recovery with political wrangling and short-termism.
UK gross domestic product (GDP) should grow by 3% in 2014, up from a previous prediction of 2.6%, according to forecasts by the Confederation of British Industry (CBI). The business lobby also brought forward its forecast for the first interest rate hike in the UK to quarter one of 2015, six months sooner than previously calculated.
In 2015, the CBI expects the economy to expand by 2.7% rather than the 2.5% it forecast previously, but it said political uncertainty and whims pose a major risk to the revival.
The CBI wants the government to eliminate the budget deficit, scrap immigration reduction targets and ensure a long-term strategic approach to big infrastructure projects.
Traders eyeing situation in Ukraine
Meanwhile, the latest developments in Eastern Europe will be acting as a backdrop after pro-Russian activists in the Donetsk region of Ukraine claimed an overwhelming victory in the controversial 'self-rule' referendum.
Despite reports of chaotic scenes at polling stations with no booths and no electoral registers, the separatists said that 89% of the public voted in favour of endorsing Donetsk's declaration of self-rule.
Another vote in the region of Luhansk was also held, the results of which are expected to show a similar result.
The referenda come despite calls from Russian President Vladimir Putin last week who asked for them to be postponed in order to allow time for talks with Kiev.
Pfizer´s AstraZeneca bid under scrutiny from MPs
Back in the UK, it was reported this weekend that the Co-operative Group is planning to remove all 2,000 of the ATMs from its supermarkets, in which is now holds only a 20% stake. A firm decision on the matter has not yet been made.
Meanwhile, MPs are this week expected to insist that Pfizer's £60bn takeover proposal for AstraZeneca includes job security for UK scientists for a minimum of 10 years. A government select committee has been set up to scrutinise the deal.
In company news out this morning, Capita, the business process outsourcing firm, said it made a 'strong start' to 2014 with over a billion pounds-worth of major new sales wins. The company said it had secured £1.1bn of contracts in the year to date, up from £660m at the same point the year before, after being awarded work with Transport for London, Scottish Wide Area Network, John Lewis and the Ministry of Defence.
FTSE 250-listed Carillion has been selected as Network Rail as the preferred partner to carry out £100m-worth of track renewal work over five years as part of a £25bn investment programme. The integrated support services company is one of three preferred partners to deliver plain line track renewals and will carry out the work in the Midlands into the North West, and from Kings Cross to the North East of England.
Just Retirement, the FTSE 250-listed provider of individually underwritten annuities (IUA), said sales jumped by over a third after strong demand for lifetime mortgages and a lower comparative quarter for individually underwritten annuities. IUA rose 34% to £288m for the quarter ended March 31st from the same period a year earlier despite the Budget having a negative impact on the last two weeks of the quarter.