Date: Thursday 21 Jun 2012
The Footsie is expected to open some 24 points lower than yesterday's close of 5,622 after the Federal Reserve disappointed investors by slashing its growth forecasts for the US economy.
While the Federal Open Market Committee decided to extend its 'Operation Twist' programme, which involving the sale of short-term debt in exchange for long-term securities with the intention of flattening the interest rate curve, the central bank said it expects US GDP to grow by 1.9-2.4% in 2012, down from earlier predictions of a 2.4-2.9% expansion. Fed Chairman Ben Bernanke said that the European crisis was "slowing US economic growth."
In company news, water company Severn Trent is targeting retail investors with the launch of a 10-year sterling bond with a coupon linked to the retail prices index.
The bonds will pay interest semi-annually at a real rate of interest of 1.3% per annum adjusted to take account of changes in the level of the UK Retail Prices Index (RPI). The bonds, to be issued at £100 a throw, could, however, end up paying less than 1.3% per year if the UK experiences deflation.
Bid talks which got the market excited on Wednesday about Invensys, the maker of rail signalling and industrial automation systems, have hit the buffers already.
In response to press speculation about an approach from Emerson Electric for some of the company's assets, news of which leaked out on Wednesday, Invensys said talks with Emerson are no longer taking place.
Dixons Retail, the electrical goods retailer which owns the Currys and PC World brands, saw a sharp uptick in like-for-like (LFL) sales in the final quarter of its financial year.
Group sales in the 52 weeks to April 28th were flat on an underlying basis compared to the year before, with strong momentum in the final quarter. Group LFL sales were down 3% year-on-year over the 52 week period but were up 5% in the final quarter. Underlying profit before tax was at the top end of the range at £70.8m, down from £85.3m the year before.
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