Ahead of UK inflation figures, which could fall into negative territory, leading shares are edging higher.
Banks and mining shares are leading the way, the latter recovering from Monday’s China-induced falls. Rio Tinto has risen 46.5p to 2860.5p while BHP Billiton is 21p better at £14.37.
Among the financials, Barclays is up 4.45p at 263.90 and Royal Bank of Scotland has climbed 5p to 358.2p. Barclays benefited from analysts at Credit Suisse putting it as its second favourite European investment bank behind UBS, although they warned further restructuring and litigation issues were possible.
Overall there is still caution around, with continuing worries about Greece running out of cash before it can reach a deal with its eurozone creditors, the uncertainty over the UK election, as well as concerns about when the US will raise interest rates. The US reporting season will also be in focus.
Rebecca O’Keeffe at Interactive Investor said:
US earnings look set to drive markets over the next week, as investors hope that company results don’t disappoint. Dollar strength and the oil price slump have subdued expectations. Companies with overseas earnings will earn less in dollar terms. Companies competing in international markets (either at home or abroad) are likely to have struggled with lower prices or reduced sales volumes. To make matters worse, low oil prices will have affected energy companies significantly, while the unexpected cold snap in March will have hampered sales more generally.
But for the moment the FTSE 100 is up 13.03 points at 7077.33.
Missing out is Aberdeen Asset Management, down 10.4p at 496.1p after RBC moved from sector perform to underperform and cut its target price from 475p to 455p. It said:
We reduce our earnings per share forecasts by 8% in 2015, 4% in 2016 and 5% in 2017. Our forecasts now incorporate higher net outflows and a lower revenue yield than we previously anticipated. We reduce our price target by 4% to 455p; the decline in our price target is solely the result of the reductions to our forecasts.
We see better opportunities elsewhere in our coverage universe after the recent share price outperformance. We further believe that a company that is experiencing downgrades in an upgrade environment and has a cautious outlook (especially compared to the more positive outlooks of its peers) should at least trade at a 15% discount to sector averages. Aberdeen’s discount to sector averages is too tight in our opinion given its Emerging Market bias and likely increase in US interest rates.
Among the mid-caps Tullow Oil has added22.5p to 362p after Citigroup raised its recommendation from neutral to buy. The business is seen as a potential bid target after recent share price falls and a lowly rating.
