14th Apr 2015 06:34
LONDON (Alliance News) - London share prices are set to open lower Tuesday, with investors focusing on UK inflation data due to be released at 0930 BST and analysts expecting to see some profit taking due to lack of catalysts to drive the market higher.
IG says futures indicate the FTSE 100 to open 8 points lower at 7,056.3. The index finished down 0.4% at 7,064.30 Monday, failing to recover from a weak open that saw worse-than-expected Chinese trade data and broker downgrades dig a hole for mining stocks. The index retreated from a record closing high of 7,089.77 and intraday high of 7,095.36, both set on Friday.
"After the strong gains seen last week in Europe it was perhaps inevitable that a new week would see a pause for breath, as investors look around for fresh catalysts to drive the next leg higher," says Michael Hewson, chief market analyst at CMC Markets UK.
"While the uncertainty continues in Europe, the UK is undergoing its own period of uncertainty as the clock ticks down to next month?s election, with both main political parties locked together in the polls," Hewson writes.
Oanda senior market analyst Craig Erlam says: "The UK is extremely likely to fall into deflation territory in the coming months and there is a real chance that will have happened in March."
"The main drivers of this are falling energy and food prices, which the Bank of England deems as being positive deflation as it doesn?t tend to alter inflation expectations and instead leaves people with a little extra cash to spend...I?m not sure if the BoE is as confident as it appears on the inflation outlook or if it just wants to be perceived to be confident but if we see ongoing declines in the core reading, we may have a problem," Erlam writes.
Estimates point to a 0% annual inflation for March, but analyst Michael Hewson says he wouldn?t be surprised to see -0.1% given the way food prices have continued to fall as the discount supermarkets continue to push prices lower, adding that the recent 5% price cuts by British Gas are likely to feed into energy bills for March.
UK retail sales grew more than expected in March, as food sales posted their strongest expansion since July 2013 due to the timing of Easter, survey data published by the British Retail Consortium and KPMG showed Tuesday. Retail sales advanced 3.2% on a like-for-like basis in March from last year, when it decreased 1.7%. Sales were expected to rise by a more modest 0.5%.
Germany's wholesale prices continued to fall in March but the pace of decline slowed for the second straight month, data from Destatis showed early Tuesday. Wholesale prices fell 1.1% year-on-year in March, following a 2.1% drop in February. The wholesale price index has been declining since July 2013.
The annual decline was largely driven by a 11.9% fall in prices of solid fuels and related products. Month-on-month, wholesale prices rose 1% in March, faster than February's 0.5% increase. This was the second consecutive rise in prices and the strongest since September 2012, Destatis said.
Wall Street ended lower Monday. The DJIA and the S&P 500 both ended down 0.5%, while the Nasdaq Composite down 0.2%. Quarterly results from JP Morgan, Wells Fargo and Johnson & Johnson, due to be released Tuesday, are likely to take centre stage as the US earnings season gets underway in earnest.
In Asia on Tuesday, the Japanese Nikkei 225 closed flat, and the Hang Seng trades down 1.2%. The Shanghai Composite is down 0.1%.
Brent crude is quoted at around USD58.20 a barrel Tuesday, and US benchmark West Texas Intermediate is quoted at USD52.22 a barrel. Gold is quoted early Tuesday at USD1,192.40 an ounce.
Interim management statements have been released by Ashmore Group, Michael Page International and Poundland, while Polymetal International released its full-year results.
Also still in the economic calendar Tuesday, the Italian consumer price index is scheduled for 0900 BST, while eurozone industrial production is at 1000 BST. In the US, the producer price index and retail sales are at 1330 BST. US Redbook index is at 1355 BST.
By Daniel Ruiz; [email protected]
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
AshmorePOLY.LPLND.L