5th Jun 2015 05:59
LONDON (Alliance News) - UK stocks are set to open lower Friday, extending the losses posted on Thursday, after Greek authorities said they planned to postpone the nation's upcoming payments to the International Monetary Fund until June 30.
Greek authorities have reported their intent to bundle the country's four June repayments to the International Monetary Fund into one instalment due June 30, the Washington-based crisis lender said Thursday.
Athens was facing a EUR300-million debt repayment Friday to the IMF and further repayments later in June totalling about EUR1.3 billion.
However, the IMF said that under a board decision adopted in the late 1970s, member nations "can ask to bundle together multiple principal payments falling due in a calendar month." A spokesman said the procedure was "intended to address the administrative difficulty of making multiple payments in a short period".
"Late on Wednesday evening Greek Prime Minister Alexis Tsipras assured an assembled pack of journalists that Friday?s repayment to the IMF of EUR300m would get paid on time, but as a week is a long time in politics, a day goes by in a blink of an eye, and last night?s sudden change of mind has raised the stakes even further as this high stakes game of Jenga goes on between Greece and its creditors," says Michael Hewson, chief market analyst at CMC Markets.
The FTSE 100 is called to open firmly lower Friday, extending the significant losses posted on Thursday when the blue-chip index closed down 1.3% at 6,859.24. Both OANDA and CMC Markets expect the index to open approximately 20 points lower at around 6,839, while IG calls it to open down at around 6,832.8.
"We?re seeing risk aversion in the markets in pre-market trading on Friday, as investors opt for the caution approach ahead of the US jobs report and after it was reported that Greece will refuse to repay EUR300 million to the IMF that is due today," says Craig Erlam, senior market analyst at OANDA.
In the US, stocks closed broadly lower overnight, with the DJIA, S&P 500 and NASDAQ Composite all closing between 0.8% and 0.9% lower.
In Asia, meanwhile, equities are mixed. The Shanghai Composite index is up 1%, while the Nikkei in Japan is down 0.1% and the Hang Seng down 0.7%.
In a busy economic calendar Friday, German factory orders for April are released at 0700 BST, with French trade data for May due shortly after at 0745 BST and UK consumer inflation expectations at 0930 BST,
Later on, eurozone gross domestic product data for the first quarter are published at 1000 BST. According to FXStreet.com, economists' expectations are for eurozone GDP to remain unchanged from the preliminary readings that were released in May, showing a 0.4% rise quarter-on-quarter and a 1.0% rise on a yearly basis.
In the afternoon, focus will shift to the release of the latest US non-farm payrolls figure at 1330 BST. The expectation according to FXStreet.com is for the US economy to have added 225,000 jobs in May, marginally higher than the 223,000 jobs added in April.
"Today's payrolls report will as usual be seen as probably the number one monthly indicator for the US," says Rhys Herbert, senior economist at Lloyds Bank. "Indeed, the [US] Federal Reserve's identification of further labour market improvement as one of the key pre-conditions for a hike in interest rates has, if anything increased its importance," he notes.
"Recent comments from Fed officials have suggested that a June interest rate hike is now unlikely but a move in September remains on the cards providing the data shows economic growth rebounding from its first quarter fall," Herbert says. "This week's economic data have so far mostly been consistent with a decent pick-up and markets will be watching closely to see if that is also true of payrolls," he adds.
The US unemployment rate, also released at 1330 BST, is expected to remain unchanged at 5.4%.
In the forex market, ahead of the data and the UK stock market open, the pound trades at USD1.5358, EUR1.3686, JPY191.133 and CHF1.4338, while the euro trades at USD1.1218.
In the corporate calendar, FTSE 250-listed Halfords Group is scheduled to publish full-year results ahead of the open Friday, while Bellway is due to release an interim management statement.
By James Kemp; [email protected]; @jamespkemp
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