European Indices Set For Higher Open After Fed Reveals Liquidity Plans - European Commentary []
3/12/2008 3:48:06 AM The major equity indices in Europe are set to open higher after major rallies bouyed share prices in Asia and the U.S.
The gains have come largely on the back of the Federal Reserve's plan to make over $200 billion in additional capital available to U.S. banks. The latest cash infusion will also allow banks to put mortgage debt up as collateral to support the loans. The news sent the Dow Jones Industrial Average up by 3.5% on Tuesday and Japan's Nikkei Average up by 1.6% in overnight trading.
The British pound has risen against its major counterparts in early Wednesday trading and is currently trading at more than $2.01 against the U.S. dollar.
Oil has retreated from a record high taken out on Tuesday but remains near $109 per barrel of light sweet crude. Prices had climbed to near $110 per barrel on Tuesday, and the Fed's plans to increase liquidity in U.S. capital markets has traders expecting increased demand, keeping prices relatively high.
In economic news, Britain's Chancellor of the Exchequer, Alistair Darling, will release his first proposed budget later on Wednesday. It is expected to include a number of new taxes and duties, but little in the way of tax cuts, and foresees slower economic growth than the government had previously predicted.
In corporate news, Britain's Standard Life reported its earnings for 2007 on Wednesday. The firm reported a profit of £465 million for the year, up from £283 million last year.
Advertising firm JCDecaux reported a profit of EUR 221 million for 2007, up from EUR 201 million last year. The company also said that it expects sales to grow by about 6% in the current year.
Shipping firm Bourbon revealed earnings of EUR 391 million for 2007 on Wednesday. This compares to EUR 153 million in 2006. The results include a gain of EUR 229 million from a sale of assets.
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