10th Jun 2015 06:01
LONDON (Alliance News) - UK shares are set to open lower Wednesday, with the Greek debt negotiations again in focus, while bond market volatility is expected to continue to weigh on equities.
Greece submitted on Tuesday new reform proposals, as Greek Prime Minister Alexis Tsipras is expected to hold key talks Wednesday with German Chancellor Angela Merkel and French President Francois Hollande, on the margins of a summit in Brussels of EU, Latin American and Caribbean leaders.
European officials appeared unconvinced Tuesday by the new set of reform proposals for Greece, amid growing fears that the country could fail to win access to bailout funds it needs to avert bankruptcy.
"I hear a lot of optimism from the Greeks, but that is an underestimation of the complexity of what is expected of them," the president of the Eurogroup, Jeroen Dijsselbloem, said in a Dutch television interview.
It is unclear whether European Commission President Jean-Claude Juncker would be willing to take part in the meeting. He had indicated at the weekend that he first wanted to see alternative Greek proposals.
Dijsselbloem also said he is not sure that a decisive meeting will be held Wednesday.
IG says futures indicate the FTSE 100 to open 12 points lower at 6741.80. The index closed down 0.5% at 6,753.80 Tuesday.
"Bond market volatility is likely to continue to be a thorn in the side of the equity market for the foreseeable future as higher inflation expectations, low interest rates and low liquidity lead to occasional periods of excessive volatility. As Mario Draghi warned, it?s just something we must get used to," says Oanda analyst Craig Erlam.
Wall Street was flat to lower Tuesday. The DJIA and the S&P 500 both ended flat, while the Nasdaq Composite closed down 0.2%.
In Asia on Wednesday, the Japanese Nikkei 225 trades up 0.1%. Meanwhile, the Hang Seng and the Shanghai Composite are trading up 0.2%
In the UK, Chancellor George Osborne is expected to set out plans to phase out the GBP3.5 billion bank levy when he delivers his annual Mansion House speech on Wednesday evening, The Times reported.
According to the report, the UK's economic and finance ministry is expected to replace the bank levy with a new corporation tax surcharge. Unlike the bank levy, which is imposed on global balance sheets, the new tax would apply only to banks' assets in the UK.
Deutsche Bank, Barclays Bank and the Royal Bank of Scotland Group were among a handful of European banks downgraded on Tuesday by Standard & Poor's, amid concern that state support in a crisis is now 'uncertain', the FT reported Wednesday.
Analysts with the rating agency warned that it was unclear what support even systematically important financial institutions in the UK and Germany would receive, following the recent implementation of the European Union's Bank Recovery and Resolution Directive, the newspaper said.
In the corporate calendar Wednesday, J Sainsbury issues a first-quarter trading statement, while Boohoo.com provides a trading update. FirstGroup, Hansa Trust, Castings and Flybe Group publish full-year results, and Zambeef Products and Shoe Zone release half-year results.
In the economic calendar, UK manufacturing and industrial production is due at 0930 BST, while the UK NIESR gross domestic product estimate is at 1500 BST. In the US, EIA Crude Oil stocks are due at 1530 BST.
By Daniel Ruiz; [email protected]
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