All eyes will be directed towards the latest Federal Reserve policy meeting on Wednesday, although no decision on US interest rates will be released until after the London markets close.
Following recent hints from Fed policymakers, most especially chair Janet Yellen, and after a stronger than expected US jobs report at the end of last week, markets are braced for the first US interest rate rise of this year, following on from the two moves made at the end of 2016 and 2015.
Craig Erlam, senior market analyst at Oanda, said: “The clearly coordinated effort to convince investors that a rate hike is firmly on the table on Wednesday, from a position in which it appeared out the question, has almost worked too well with markets now almost fully pricing one in.
“The risk is that the Fed now struggles to live up to expectations and should it for whatever reason delay raising interest rates, it may have unintentionally dramatically misguided investors which could result in significant volatility come Wednesday.”
UK interest rate thoughts will also be at the back of investors’ minds ahead of Thursday’s Bank of England policy meeting, with unemployment and average earnings data due for release on Wednesday, expected to show the continued resilience of Britain’s economy in the face of Brexit vote worries.
Howard Archer, chief UK and European economist at Markit IHS Global, expects UK employment to have risen by 80,000 in the three months to January to stand at a new record high of 31.842 mln.
Meanwhile, he forecasts average annual weekly earnings growth to have remained at 2.4% in January, after dipping to that level in December from 2.7% in November, despite increases in consumer price inflation.
However, given Brexit uncertainties, few commentators expect the BoE to consider hiking UK interest rates this year, or even next year.
Generics eyed ...
On the corporate front, generics drugmaker Hikma Pharmaceuticals PLC (LON:HIK) will be the only FTSE 100-listed firm to report results on Wednesday.
After the slump it suffered last year following the release of disappointing half-year results in August, Hikma shares are up 12.4% in the year-to-date and the company served up a taster ahead of its results by recently launching a generic version of the anti-depressant drug Pristiq.
The group had some delayed launches in the second half of the financial year so there will be some repair work to be done on its reputation.
In a preview of Hikma’s numbers, Graham Spooner, investment research analysts at The Share Centre said: “In the last trading update it reduced its guidance for the Generics business for 2016 but kept a positive outlook for 2017.
“Investors will therefore be keen for an update here and a guidance of what drug launches are likely to be made. It also reported difficulties due to the weakness of the Egyptian pound.”
The market is expecting Hikma to report 2016 adjusted pretax profit of around US$300mln on sales of around US$1.9bn.
Meanwhile, further down the market, results from construction materials firm Marshalls PLC (LON:MSHL) could beat forecasts, according to analysts at broker Peel Hunt, helped by some good weather in the fourth-quarter.
In a preview note, they said: “2016 has been a good year for margin improvement but we believe there is still more to come on this front in 2017-18.”
The analysts added: “We are still waiting to see if the group can conclude some acquisitions, but the flip side is that any excess cash will be returned to shareholders.”
Significant announcements expected on Wednesday:
Finals: Fusionex International (LON:FXI), Gem Diamonds Ltd (LON:GEMD), Hikma Pharmaceuticals PLC (LON:HIK) Marshalls PLC (LON:MSLH), Robert Walters PLC (LON:RWA), StatPro Group PLC, Brooks Macdonald Group plc (LON:BRK)
Interims: Clinigen Group (LON:CLIN) , Forterra PLC (LON:FORT) , Thinksmart Ltd (LON:TSL)