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Reports UK

UK stock market morning note (December 19, 2013)

December 19, 2013, Thursday, 12:47 GMT | 07:47 EST | 17:17 IST | 19:47 SGT
Contributed by SVS Securities

The FTSE 100 is called to open higher this morning following the gains overnight on Wall Street in reaction to the US Federal Reserve decision to begin tapering its bond buying programme with effect from January 2014. The stimulus package will be cut from USD85bn a month to USD75bn with the Fed also adjusting its forward guidance with interest rates to stay low until unemployment falls 'well past' 6.5%. The outgoing Fed Chairman, Ben Bernanke expects that tapering will continue in 'moderate steps' through most of next year. Overnight we had domestic economic news from the RICS reporting that it expects UK house prices to rise 8% in 2014 as demand for homes continues to exceed supply, with London still leading the growth. Today's economic diary will see the release of domestic retail sales figures with attention then focusing on the US with the publication of the latest weekly jobless claims, the Philly Fed manufacturing index and existing home sales data. Commodity prices are mixed and on the foreign exchanges, the dollar is slightly weaker against the likes of the pound, euro and yen but all are trading in narrow ranges. It is a quieter day for major corporate news.

Company Announcements

Meggitt Contract Win. It has been awarded a USD18m contract from the Australian Defence Force and follows several recent mainly international deals amounting to over USD40m with Italy, Kuwait, Singapore and the US Army.

Serco Pre-Close Statement reports an update following the release of its IMS on 14 November 2013. Free cashflow is anticipated to be lower this year than in 2012 and an estimate previously provided for one-off costs to be treated as exceptional items for 2013 has now been estimated at GBP17m (previously GBP12m). Within the contracts where there has been a related impact from audits and accounting charges and the like the estimate is now up to GBP19m (previously GBP15m). These exclude any settlement arising from the Electronic Monitoring contract where it anticipates being able to provide an update shortly. This will also cover the conclusion of the audit and reviews of its UK Central Government contracts as well as progress on its corporate renewal programme. It added that it now anticipates recognising exceptional income of GBP9m for 2013 in relation to the Intelenet acquisition.