US question hangs over market

STOCK MARKETS - THE WEEK IN VIEW

The FT-SE 100 can be expected to flounder this week. Concern that US borrowing costs are headed even higher, muddying the corporate profit picture on both sides of the Atlantic, is to blame.

Activity is likely to be muted as trading is shortened by the bank holiday on Monday. It is also the final week of the tax year, so many brokers are likely to be preoccupied with organising bed-and-breakfast deals to minimise tax liabilities.

With no major UK companies scheduled to report earnings, attention will centre on the US, where several economic reports will be released. These should help to answer the big question on most investors' minds: Is another US rate rise imminent?

Last week, the US Federal Reserve raised overnight lending rates a quarter point to 5.5 per cent, the first increase since January 1996. That sent the yield on the 30-year Treasury bond, a barometer of US inflation expectations, soaring to 7.09 per cent and hammered the Dow Jones Industrial Average.

Figures due for release in Washington include the National Association of Purchasing Management's March survey, Tuesday, February's factory orders, Wednesday, and the March employment report, Friday.

"We'll see very low volumes," said Graham Campbell, investment manager at Edinburgh Fund Managers. "Short term, there's more room for caution."

Drug, oil and other companies that derive a large portion of their profits from the US, such as Glaxo Wellcome and British Petroleum, are expected to follow the US market.

On the bright side, there's Centrica, the former gas marketing arm of British Gas that became a separate company in February. Last week, Centrica rose 11.9 per cent to 63.5p. While that's respectable enough, the share remains well below the 73p price target that SBC Warburg has put on it.

Most shares, however, are probably going to find it tough to post any significant gains.

"When the Fed tightens once, the question immediately becomes 'When and how often will they tighten again?'" said Glen Bickerstaff, a money manager at Transamerica Investment Services. "Until we change that psychology, there will be some interest-rate head wind here for the market."

Domestic attention is likely to focus on politics as the Conservative and Labour Parties will publish their election manifestos. Although it is doubtful that the Labour Party will spell out too much detail about its fiscal plans, if it wins, a summer Budget is expected. Copyright: IOS & Bloomberg

Start your day with The Independent, sign up for daily news emails
News
i100 In this video, the late actor Leonard Nimoy explains how he decided to use the gesture for his character
Arts and Entertainment
Secrets of JK Rowling's Harry Potter workings have been revealed in a new bibliography
arts + ents
News
Robert De Niro has walked off the set of Edge of Darkness
news The Godfather Part II actor has an estimated wealth of over $200m
Arts and Entertainment
Fearne Cotton is leaving Radio 1 after a decade
radio The popular DJ is leaving for 'family and new adventures'
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower