8th Jun 2015 06:36
LONDON (Alliance News) - London share prices are set to open higher Monday, following mixed economic data from China and Japan.
With the day relatively light in terms of significant economic reports from Europe and the US, the focus will be on the G7 meeting in Germany and the continuing Greek debt negotiations.
IG says futures indicate the FTSE 100 to open 9 points higher at 6,813.50 . The index closed Friday down 0.8% at 6,804.60, and was down 2.6% for the week as a whole, having only risen on Wednesday.
European Commission President Jean-Claude Juncker rejected a phone call Saturday from Greek Prime Minister Alexis Tsipras asking for a new round of talks on Athens' deepening debt crisis, but that does not mean the matter won't weigh on the G7 summit of the world's major economies taking place Bavaria.
Juncker turned down Tsipras' request, saying that there had been no new developments in the crisis, which threatens to result in cash-strapped Greece defaulting, according to dpa information.
But the mood between Greece and its creditors has soured after Tsipras lashed out at Athens' creditors in a speech to parliament on Friday.
"A surprisingly strident speech from Tsipras to the Greek parliament late on Friday, in which he accused EU creditors of 'absurd' behaviour with respect to the recent new proposals put forward with the help of the EU Commission on the part of the institutions, has once again highlighted the extent of the chasm between the two sides," says Michael Hewson, chief market analyst at CMC Markets UK.
"It does seem that Tsipras is getting closer to the point of becoming boxed in by some in his party who are not prepared to countenance any form of acquiescence to creditor?s demands, which could make it almost impossible to get any agreement through the Greek parliament, even if he were able to reach a compromise with the creditors," Hewson writes.
German Chancellor Angela Merkel and French President Francois Hollande telephoned with Tsipras Saturday and the three leaders agreed to meet on Wednesday evening in Brussels, government officials in Athens said. Eurogroup President Jeroen Dijsselbloem and Juncker also will join the meeting.
Germany's industrial production grew by more than expected in April, data from Destatis revealed Monday. Industrial production expanded 0.9% month-on-month in April, reversing a revised 0.4% fall in March. It was larger than an expected 0.5% increase and also the biggest growth seen so far this year.
Wall Street ended lower Friday. The DJIA closed down 0.3%, and the S&P 500 ended and the Nasdaq Composite ended down 0.2%.
In Asia on Monday, the Japanese Nikkei 225 closed flat. In Hong Kong, the Hang Seng trades up 0.5%, and the Shanghai Composite is trading up 1.6%.
China's foreign trade surplus increased by more than expected in May, as imports fell faster than exports, figures from the Customs Office showed. The trade surplus of the country came in at USD59.49 billion in May, more than the USD44.8 billion expected by economists. Exports fell 2.5% year-over-year in May, while it was expected to decline by 4.4%. Imports plunged 17.6%, much more than a 10.0% fall expected by economists.
CMC Markets' Hewson highlights the drop in imports, as the data has slid for the sixth consecutive month. "This sharp slide increases concern that Chinese authorities face an uphill struggle to meet their 7% gross domestic product target, and furthermore point to a Chinese economy where domestic demand appears to be sliding sharply," he says.
In Japan, gross domestic product expanded 3.9% on year in the first quarter of 2015, the Cabinet Office said in the revised report released on Monday.
This was well above forecasts for 2.8% growth and up from the February 15 preliminary reading of a 2.4% rise. GDP growth for the fourth quarter of 2014 was 1.2%. On a seasonally adjusted basis, GDP was revised up to 1% sequentially, also above economists expectations for an increase of 0.7% and up from the preliminary reading of 0.6%. This compares to 0.3% growth in the fourth quarter.
"The revision was mostly driven by higher capital spending which will be music to the ears of the government," says Oanda analyst Craig Erlam. "Consumption was also higher, which may suggest that after a year of trauma following the sales tax hike, the consumer may finally be adjusting. The question now is whether this can all lead to higher wages and inflation, which has been notoriously hard to come by."
In the UK, Drax Group said trading conditions have "remained challenging" in 2015 as weak gas markets continue to cause lower power prices, but said its expectations for the full year remain unchanged. The FTSE 250-listed UK power generator said although conditions remain difficult, it continues to benefit from a strong contracted position and good operational performance of its generating units.
As at June 1, Drax has 23.8 terawatt hours of power sales secured for 2015, which is up from 20.4 terawatt hours at the end of February. For 2016, Drax has power sales of 12.1 terawatt hours contracted, which is up from 9.4 terawatt hours at the end of February.
In the economic calendar Monday, eurozone Sentix Investor Confidence is at 0930 BST. In the US, labor market conditions are due at 1500 BST.
By Daniel Ruiz; [email protected]
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