MARKET PREVIEW: FTSE 100 to extend gains after US and Asian stocks surgeOctober 28 2011, 7:00am
UK stocks are expected to extend gains today after rallying on Thursday on the back of the long awaited EU anti-crisis deal, which was unveiled early in the morning yesterday. The FTSE 100 is expected to open at 5,730, up 17 points (0.3 percent) from Thursday’s close.
EU policymakers have agreed to increase the size of Europe’s bailout fund to €1 trillion and reduce Greece’s debt burden by writing down half of its debt owned by private bondholders. In addition, the EU presented a bank recapitalisation plan, which calls for European banks to raise additional capital of €106 billion.
The announcement triggered a rally in the FTSE 100 index, which put it at three month highs, also giving a boost to US and Asian equities.
“There does remain some doubt however as to how these measures will be implemented and achieved, none more so than the increase in size of the European Financial Stability Facility,” said chief market strategist at City Index Joshua Raymond.
“These details are set to be confirmed later next month and for now, it seems investors have been happy to put those concerns to the backburner.”
Today’s macroeconomic calendar is thin with no US data set to be released apart from the final reading of the University of Michigan consumer confidence index for October.
Earlier today, it was revealed that Britain’s Gfk consumer confidence index fell from minus-30 in September to minus-32 this month.
Across the Atlantic, the Dow Jones Industrial Average (DJIA) rallied 339 points (2.85 percent) to end the session at 12,208 and the broader S&P 500 index climbed 42 (3.45 percent) to close at 1,284.
Asian stocks moved in the same direction as US equities. Japan’s benchmark Nikkei 225 index stood 95 points (1.05 percent) higher at 9,024 at the end of the session and China’s Shanghai Composite Index added 27 points (1.1 percent) to reach 2,463 just before close of play.