International Markets: London - All eyes on the banks

UK STOCKS are expected to rise, with indexes setting new records as investors anticipate robust earnings from a slew of Britain's largest companies, with banks and insurers likely to set the pace.

Investors will be closely watching profits from HSBC Holdings and Standard Chartered - both banks that are heavily exposed to Asia - to gauge how deeply the slowdown in Asian economies is likely to hurt company earnings.

The benchmark FT-SE 100 index rose 169.3 points, or 3.03 per cent, to a record 5,751.6 last week, bolstered by gains from banks and insurers amid speculation about more takeovers among financial companies. The FT- SE Insurance index led the week's gains, rising 9.95 per cent, with Royal & Sun Alliance up 12.1 per cent and Commercial Union up 12.2 per cent.

Insurers Commercial Union, Guardian Royal Exchange, Prudential and Alliance & Leicester are all scheduled to report earnings this week.

Bonds are likely to be little changed as investors reassess the outlook for official interest rates after Bank of England Governor Eddie George said on Friday that Britain should "contemplate the possibility" of further increases. Mr George said the decision on whether to raise rates again was "very finely balanced".

"My feeling is the Bank of England are trying to talk rates up without actually putting them up," said Nick Vaughan, an economist at Barclays Capital. "If they were really worried about things, they would have put rates up in February. Our view is official rates have peaked and the bank wants to avoid sterling coming off too sharply."

Mr George's remarks "suggest that a medium-term base rate hike is still likely," said Kirit Shah, an economist at Sanwa International.

The Bank of England's Monetary Policy Committee next meets to set interest rates on 4 March.

HSBC Holdings is expected to post net income of pounds 3.45bn, a rise of 11 per cent on a year earlier. Meanwhile Standard Chartered, is expected to post net income of pounds 567m, a decline of 4 per cent on a year earlier.

Another bank, National Westminster, is expected to say 1997 net income rose 53 per cent to pounds 716m. The bank is seen as a likely candidate for merger or acquisition. "NatWest has a lot of very patient shareholders. I think they want to see some corporate activity'' such as a merger or acquisition, said Michael Trippitt, an analyst at Schroders, which has a "sell" recommendation on the bank.

This weekend's London meeting of finance ministers of the Group of Seven industrialised nations might also help set the outlook for stocks in the coming days. They are likely to criticise Japan's latest package of measures designed to boost its economy as insufficient. If successful, pressure for Japan to do more to resuscitate Asian economies could mean the region's economic slowdown won't slow global growth.

Copyright: IOS & Bloomberg

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Telesales Executive - OTE £25,000

£13000 - £25000 per annum: Recruitment Genius: Would you like to be part of a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Are you passionate about sale...

Ashdown Group: Graduate Developer (Trainee) - City, London

£25000 per annum + benefits: Ashdown Group: A large financial services company...

Ashdown Group: Marketing Assistant - Financial Services Sector - London

£20400 per annum: Ashdown Group: An established and highly reputable organisat...

Day In a Page

The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory
Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

Cook not the only one to be caught in The Oval mindwarp

Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

Can Benitez get the best out of Bale?

Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

Beijing witnesses new stage in the Jess and Kat rivalry

The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

Jeremy Corbyn interview: A shrewd operator desperate for power

His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

Isis executes Palmyra antiquities chief

Robert Fisk on the defender of the ancient city's past who was killed for protecting its future