Positive start forecast as rosy US results expected

BLUE chips are set for gains on the open this morning, as investors are expected to focus on the prospect of some healthy numbers from the US by way of the third-quarter earnings season.

GFT is quoting the FTSE 100 index to open up 22 points from Friday’s close, at a level of 5,725. The German DAX 40 is expected to open up 23 points at 6,515, and the French CAC 40 index is forecast to open up 14 points at 3,841.

Traders will have to contend with a barrage of market influences in the coming days. In addition to digesting the news out from corporate America, there are concerns over the banking sector’s need to raise capital to cope with new Basel III regulations, a la Standard Chartered, as well as worries over China reigning in spending, and the on-going developments in the currency markets, and whether the present international forex skirmishes evolve into an all-out war of intervention where everyone loses.

The largest earnings gains are expected in the financial sector, with Citigroup results out today and Bank of America, Goldman Sachs, JP Morgan and Wells Fargo also all due out later this week, and the overall consensus for the sector seems to point towards some expectation-beaters.

Also expect more “Fed speak”, more talk of QE2 and further pressure on the dollar. Finally, commodity of the week is likely to be cotton, with the futures at all-time highs on supply fears as a result of poor weather and strong demand from China.

Martin Slaney, Director, Global Dealing Operations, GFT