1st May 2015 06:34
LONDON (Alliance News) - UK stocks are pointed lower Friday, taking their lead from heavy losses incurred on Wall Street Thursday and a slowdown shown by the Chinese Purchasing Managers Index.
IG says futures indicate the FTSE 100 to open 18.3 points lower at 6,942.3. The index rose 0.2% to 6,960.63 Thursday on another busy day of corporate news.
US stock markets closed lower on Thursday. The DJIA ended down 1.1%, the S&P 500 closed down 1.0% and the Nasdaq Composite lost 1.6%.
The weakness on Wall Street was partly due to ongoing uncertainty about the outlook for interest rates, even after the Federal Reserve's monetary policy announcement on Wednesday. The Fed's statement failed to provide specific guidance regarding interest rates, although several analysts noted the central bank did not rule out a rate hike at the June meeting.
In Asia Friday, Shanghai and Hong Kong are closed for Labour day. The Japanese Nikkei closed up 0.1%. Frankfurt and Paris also will be closed Friday for the holiday.
Chinese non-manufacturing PMI fell slightly to 53.4 in April from 53.7 in March. The number shows more signs of weakness in the world's second largest economy, which further eased monetary policy last month.
The manufacturing sector in China continued to barely expand in April, with a manufacturing PMI score of 50.1. That beat expectations for 50.0, and was unchanged from the March reading. It also remained just above the line of 50 that separates expansion from contraction.
"The stimulus efforts from the People?s Bank of China seem to be doing very little and much more may be needed if the country is going to hit its already low 7% target this year. I think further rate and reserve requirement ratio cuts in the coming months are extremely likely," says Craig Erlam, senior market analyst at Oanda.
The manufacturing sector in Japan slipped into contraction for the first time in nine months, the latest survey from Markit Economics showed with a revised manufacturing PMI reading of 49.9. That's up from last month's preliminary April reading of 47.7, although it's down from 50.3 in March. It also slipped below the boom-or-bust line of 50 that separates expansion from contraction.
Consumer prices in Japan gained 2.3% on year in March, the Ministry of Internal Affairs and Communications said. That exceeded forecasts for 2.2%, which would have been unchanged from the February reading.
Meanwhile, the unemployment rate in Japan came in at a seasonally adjusted 3.4% on year in March. That beat forecasts for 3.5%, which would have been unchanged from the February reading.
On the corporate front, Lloyds Banking Group reported a 12% fall in first-quarter pretax profit but said numbers were better on an underlying basis. Pretax profit fell to GBP1.21 billion in the three months ended March 31, compared with GBP1.37 billion in the corresponding quarter a year earlier.
Underlying profit, which strips out numerous costs and provisions, increased to GBP2.18 billion from GBP1.80 billion.
GlaxoSmithKline said Theravance Inc said the US Food and Drug Administration has approved Breo Ellipta for the treatment of asthma in patients over the age of eighteen. The efficacy and safety of the treatment was studied in a clinical trial with over 12,000 subjects in 23 studies of patients aged twelve and over, Glaxo said.
FTSE 100-listed engineering company Smiths Group said it has hired Chris O'Shea as its new finance director, poaching him away from FTSE 250-listed molten flow engineering company Vesuvius. O'Shea will join Smiths Group on September 18. He joins from Vesuvius and formerly held senior positions at BG Group and Royal Dutch Shell.
In the economic calendar, there are UK mortgage approvals, consumer credit and Markit manufacturing Purchasing Managers' Index at 0930 BST. US Markit manufacturing PMI is at 1445 BST, before ISM manufacturing PMI and Reuters/Michigan Consumer Sentiment Index, both at 1500 BST.
By Neil Thakrar; [email protected]; @NeilThakrar1
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