Stocks to rise on Fed expectations

AN apparent uptick in confidence over Europe’s future is set to take stock markets higher this morning, underscored by Wall Street closing up on Friday for a fifth successive day, combined with hopes of further impending action from the Federal Reserve later this week.

GFT quotes two-way prices on stock indices around the clock, even when the underlying markets are closed. The FTSE 100 index is called to open up approximately half of one per cent, around 27 points higher at 5,395. Germany’s DAX 30 index is expected to open up 40 points at 5,603, and the French CAC 40 is forecast to open up 13 points at 3,034.

Markets around the world will be glued to events from the Fed’s open market committee meeting this week, where by Wednesday we will know whether a third round of stimulus will finally be announced. Given the rising inflationary pressures in the US, where year-on-year inflation is at 3.8 per cent, a third round of bond buying or QE3 is not expected to be announced; instead, the word on the street is for the Fed to announce a programme of swapping holdings of shorter-maturity Treasuries with longer-dated ones, a measure which would intend to press down interest rates and encourage bank lending to companies and corporate investment.

While its long-awaited announcement is likely to give shares a temporary adrenalin kick, already we are hearing analysts question the validity of such a move.

Martin Slaney is director of global dealing operations at GFT