13th May 2015 06:34
LONDON (Alliance News) - London share prices are set to open higher Wednesday, in a busy day in terms of economic data, with investors focusing on first-quarter GDP readings from France, Germany, Italy and the EU, as well as the Bank of England inflation report, which is due at 1030 BST.
IG says futures indicate the FTSE 100 to open 17 points higher at 6,950.80. The index closed down 1.4% at 6,933.80, driven by a further sell-off in bond markets and continued concerns about Greek debt negotiations.
France reported Q1 GDP growth of 0.6% quarter-on-quarter and 0.7% on year, above expectations. Meanwhile, the German economy grew at a slower pace in the first quarter of the year, data released by Destatis showed Wednesday.
German gross domestic product rose 0.3% sequentially in the quarter, slower than the 0.7% expansion seen a quarter ago. It was also weaker than the 0.5% growth forecast by economists. According to provisional calculations, positive contributions came mainly from domestic demand, while foreign trade had a downward effect. Households and general government increased their spending. Capital formation also increased from the prior quarter.
The German economy grew by an adjusted 1% year-on-year, slowing from 1.4% in the fourth quarter of 2014.
Italian Q1 GDP is due at 0900 BST, while Eurozone Q1 GDP is at 1000 BST.
"Now that the election is out of the way, today?s Bank of England inflation report could well see Governor Mark Carney upgrade the central banks growth and inflation forecasts for the UK economy, over the next 12 months, as well as giving him much more free reign to be candid about the health of the UK economy, without any political constraints," says Michael Hewson, senior markets analyst at CMC Markets UK.
Oanda analyst Craig Erlam adds: "Market interest rate hike expectations appear to have been widely pushed back to next year now, but with the economic recovery clearly on a strong footing and rising oil prices likely to provide a lift to the inflation outlook, I wonder if Carney may put later this year back on the table. It will also be interesting to hear the banks view on the election outcome and what impact this will have."
In Asia on Wednesday, the Japanese Nikkei 225 closed up 0.7%. Meanwhile, in Hong Kong, the Hang Seng index trades down 0.2%, and the Shanghai Composite is down 0.1%.
China's industrial production grew at a faster pace in April, while retail sales growth eased for the third straight month, data from the National Bureau of Statistics showed Wednesday.
Industrial output expanded 5.9% year-on-year in April, faster than March's 5.6% increase. Nonetheless, it was slightly weaker than a 6% rise forecast by economists. Annual growth in retail sales slowed to 10% in April from 10.2% in March. The annual growth rate slowed for the third straight month and came in below the expected increase of 10.4%.
Wall Street ended lower Tuesday. The DJIA closed down 0.2%, the S&P 500 ended down 0.3%, and the Nasdaq Composite finished down 0.4%.
In the corporate front, Severn Trent said it is selling its water purification business to joint venture partner Industrie De Nora in a deal that values the whole unit at USD99 million and Severn Trent's share at USD81.2 million. The water utility said its share will be settled by a cash payment of USD20.1 million, or GBP12.6 million, and the rest through the settlement of net intercompany debt. It expects the sale to complete at the end of June.
Tesco has closed its last six Homeplus stores and has cut around 650 jobs in the process, Sky News reported. Tesco said the stores in Hartcliffe in Bristol, Bracknell, Nottingham, Denton, Bromborough and Preston will close on June 27. Six other stores were closed by the company in March.
The decision brings down the curtain on Tesco's non-food retail business, which launched in 2005 as standalone outlets selling homeware, clothing, electrical goods and stationary products.
Also in the economic calendar Wednesday, the UK ILO unemployment rate is at 0930 BST. In the US, retail sales are due at 1330 BST, while EIA crude oil stocks are at 1530 BST.
By Daniel Ruiz; [email protected]
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