Looking forward to this week's economic data - UK consumer price index published on Wednesday will show a further reduction in inflation, market consensus expects a decline to 3.4% for January from 4.2% in December; providing the Bank of England with further headroom with their quantitative easing programme. Eurozone fourth quarter GDP estimates are likely to confirm a weak quarter across the region, including Germany – estimates range from -0.3 to -0.6 shrinkage, highlighting the gloomy picture ahead despite the short term resolution to the immediate Greek situation. Following the trend from previous data highlighting a two speed recovery between developed economies - the US economy is expected to produce more positive data. Manufacturing surveys on Wednesday and Thursday are expected to be strong, building on previous month’s momentum; while both retail sales and housing starts numbers are likely to be more encouraging than those of Europe.
The FTSE 100 retreated last week to end the week at 5,852 with the situation in Greece proving cause for concern again for investors. Nonetheless, after the Bank of England extended their asset purchase programme on Thursday the index did show positive signs, touching a six-month inter day high of 5,916. For most of last week US equities continued their positive start to 2012 prompting a number of industry professionals to suggest an overweight position for equities - confirming their short term risk on strategy. Apple shares surged over 7% on the week as the world’s largest company by market capitalisation reached a new all-time high of $497.62 on reports on an impending launch of their latest iPad offering.
This week’s corporate diary includes full year results for BAE Systems on Thursday. Investors will be hoping the defence company will disclose proactive plans to seize the $20 billion contract to build 126 aircraft for the Indian Government from Frances Dassault. Further clarity will also be required on the group’s response to defence budget cuts across Europe. Market consensus suggests a 5.5% rise in pre-tax profits to £1.9 billion for 2012 with earnings per share increasing to 41.45p from 40.85p in 2011.
