UK equities are expected to get the week off to a positive start this morning, opening higher as investors await a raft of important data due to be released today and throughout the week.
Last week, European stocks were buoyed by hopes of potential stimulus measures from both Chinese authorities and the European Central Bank.
Comments made by Bundesbank President Jens Weidmann suggested that the ECB had an open mind about the use of negative interest rates and large-scale asset purchases in an attempt to fight a strong euro.
"This has fuelled an unrealistic expectation that we could well see the ECB, along with Chinese authorities look to fill the gap, with markets looking with keen interest at this week’s ECB rate meeting," says Michael Hewson, chief market analyst at CMC Markets.
Both CMC Markets and IG indicate the FTSE 100 to open slightly higher Monday. The blue-chip index is expected to open up at approximately 6,625 points, having closed at 6,615.58 on Friday.
"This week begins with a number of interesting data releases, but we will also watch for comments from key individuals across the course of the day," says David Page, senior UK macroeconomist at Lloyds Bank.
Already released Monday, German retail sales grew unexpectedly in February. Year-on-year, retail sales grew 2%, ahead of the 0.9% rise posted in January, and also exceeding the 0.8% increase forecast by economists. Monthly, retail sales grew 1.3%, higher than the 1.7% rise in January and the expected 0.5% fall that had been forecast by economists.
Despite the better-than-expected reading, the euro was little changed in the aftermath of the data. Ahead of the UK open, the single currency trades at $1.3754, while the pound trades at EUR1.2091.
Still to come in the data calendar, the latest UK lending figures for February are scheduled to be released at 0830 GMT. "Concerns remain about how balanced the recent economic revival is in the context of consumer spending," says Hewson. "These latest numbers could reinforce the belief that the current rebound is being fuelled by cheap lending, particularly in the housing market," he adds.
Mortgage approvals are expected to dip slightly in February. Economists' expectations are for the reading to come in at 75,000, down from the 76,947 posted in January.
"This would corroborate other signs that the housing market came off the boil at the start of 2014," says Page. However, "we think this likely reflects heavy rainfall, deterring house viewing, and, as such, any softening should prove temporary," he says.
Shortly after, the euro area releases its preliminary consumer price inflation estimates for March. Economists expect a slight decrease in the monthly reading to 0.6% from 0.7% in February. "While this may fan immediate fears about euro area deflation, we suspect that the rate will rebound again as soon as next month," says Page.
Bank of England Governor Mark Carney and Federal Reserve Chair Janet Yellen also are due to give speeches Monday.
In corporate news, on the final day of the UK corporate reporting season, FTSE 250-listed Polymetal International has released full-year results.
Life insurance companies will remain in focus, having fallen sharply on Friday. The Financial Conduct Authority has published its review into the market Monday.
