Date: Friday 22 Jun 2012
City sources predict the FTSE 100 will open down 47 points from yesterday's close of 5,566.
In particular focus this morning will likely be Moody's downgrade of 15 global banks and securities firms including Bank of America, Citigroup and UK banks Barclays, HSBC and RBS.
That following sharp falls last night on Wall Street, following a very weak reading for the Federal Reserve Bank of Philadelphia´s regional manufacturing survey. In turn, this report set-off a wave of selling in commodities that saw the S&P GSCI go into bear market territory.
On tap for today is the German IFO business confidence index at 9AM along with a meeting of the leaders of the Eurozone´s four main economies, today, in Rome. They are trying to reach a consensus ahead of next week´s summit. Eurozone finance ministers are also scheduled to meet today.
Lastly, investors seem unimpressed with Spain´s private sector audit of its financial system. More especifically, some commentary holds that markets are taking issue with the Madrid government´s assertion that its banks will only need between €16bn and €25bn, as set out in the audit´s base-case scenario, instead of the higher losses foreseen under the stressed scenarios.
Royal Bank of Scotland (RBS) has responded to its downgrade from Moody's by releasing a statement saying that it isn't happy with the decision: "The group disagrees with Moody's ratings change which the group feels is backward-looking and does not give adequate credit for the substantial improvements the group has made to its balance sheet, funding and risk profile," RBS said.
In other company news, the board of mining titan BHP Billiton has given the go-ahead to a massive investment on its coal operations in New South Wales, Australia. The group is spending US$845m to sustain operations at Illawarra Coal by establishing a replacement mining area at the Appin Mine.
Heritage Oil has started drilling the Miran West-4 appraisal well in the Kurdistan region in the Middle East, the fifth well to be drilled on the Miran field. "On completion of the drilling, Heritage plans to undertake an extended well test of these oil bearing reservoirs selling between 3,000 to 5,000 barrels of oil gross per day into the local market," the company said.
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