FTSE opens to small gains ahead of BoE minutes and UK Labour Data

The FTSE 100 opened to small gains of 9 points at 5638 led mostly by gains in heavyweight oil firms, though a raft of economic data out in the first few hours of trading kept the UK index largely unmoved.

The release of the Bank of England minutes from the previous MPC meeting at 9.30am will be watched for the voting patterns that allowed the Central Bank to increase asset purchases by £50bn earlier this month. A vote of 7 to 2 in favour is expected but a weaker majority vote could threaten any chances for a further increase in asset purchases in the near term. There will also be a focus on whether a more aggressive approach to stimulus was discussed in the meeting.

At the same time as the MPC minutes are released, we will also see the latest UK labour data for May. The UK unemployment rate is expected to remain flat at 8.2% whilst claimant counts is set to fall to 5,000 from a previous rate of 8,100 claims. US housing starts will also be watched in the afternoon session.

The FTSE 100 remains locked in a sideways trading range and many investors are awaiting a break out. From a technical perspective, a break above 5700 could help the UK index to find some near term bullish momentum, whilst a fall below support of 5595 could see the FTSE head lower.

Today marks the second day of Ben Bernanke, the Chairman of the US Federal Reserve, testify to the House Financial Services Committee for his usual semi-annual testimony. Yesterday saw Bernanke fail to inspire the markets by refraining from announcing any timeframe for a more aggressive take on stimulus but he did mention some of the easing tools at their disposal. Further clues or hints towards future monetary policy will be watched today.

US corporate earnings continues in full flow, with Bank of America set to report their respective results late this morning before the US opening bell.

UK earnings and trading updates have already seen early moves in the prices of equities. Fresnillo shares headed towards the top of the FTSE 100 leader board after the precious metals miner said that it was on track to reach its 2012 production targets. The miner saw gold production increase by 15% for the last quarter compared to the same period a year ago. Fresnillo shares had fallen 8% in the last two weeks and so the update is being used by some investors to pick up shares from their lows, though given the weighting the firms share prices has to expectations of QE from the Fed, the longevity of today’s buying will likely continue to be weighted in QE outlook.

Shares in the London Stock Exchange (LSE) fell 0.7% in early trade despite the exchange reporting a 10% jump in revenues to £209.5m. The jump had however been largely expected given that the firm is now starting to see the benefits from its stake in the FTSE International, in an effort to diversify more towards derivatives.

Homeserve shares rose 4% despite the company denying reports in the Daily Telegraph that the group was understood to have been approached by private equity firms Cinven, KKR and Apax. Homeserve announced before the market opened that it was not in any takeover talks.