LONDON MARKET EARLY CALL: Stocks Called Slightly Lower Ahead Of UK GDP

29th Mar 2018 07:17

LONDON (Alliance News) - Stocks in London are set to open modestly lower on Thursday, with focus in the UK on a fourth quarter gross domestic product reading at 0930 BST.

GDP is seen coming in unchanged from the previous reading at 0.4% growth quarter-on-quarter, and up 1.4% year-on-year.

"From a data perspective today promises to be the most eventful day of the week," London Capital Group Head of Research Jasper Lawler said. "First up, the UK GDP, which is expected to show that the British economy expanded by a limp 0.4% quarter on quarter or 1.4% year on year."

"The stalling of economic growth as Britain continues to face Brexit headwinds, will be laid bare today and magnified following the upbeat 2.9% annual growth recorded in the US", Lawler continued. "Even closer to home, in the European Union, the UK is still a clear laggard behind other major economies with Germany’s economy growing 2.2% in 2017 and France by 1.9%."

"With business investment anemic at best and UK households strained under intense financial conditions of rising prices and falling wages for the fourth quarter, any surprise to the upside is looking slim," Lawler added. "With traders optimistic of a rate hike from the BoE in May, a disappointing read could dampen hopes, pulling the pound lower."

Sterling was quoted at USD1.4086 early Thursday ahead of the data, lower than USD1.4102 at the London equities close on Wednesday.

Already released on Thursday, GfK data reported that UK Consumer Confidence rose to -7 in March compared to -10 in February, beating consensus forecasts for it to remain at -10.

This was after all five of its constituent measures recorded higher values in the month. In particular, this was driven by a strong jump in confidence regarding consumers' personal finance situation over the next year which jumped to 10 from 5 in February.

"Despite the Beast from the East leaving the nation shivering under a blanket of snow, stoic UK consumers turned faintly bullish this March with a three-point uptick in the Overall Index Score to -7," GfK Head of Experience Innovation UK Joe Staton said. "Spring is in the air with increases across the board on personal finances, the general economy – over the last year and next year – and on current major purchase intentions."

"The prospect of wage rises finally outstripping declining inflation, high levels of employment with low-level interest rates, and finally some movement on the Brexit front appear to have boosted our spirits," Staton added. "It's still a little early to be talking about green-shoots, and the core score is of course still negative, but this is definitely a movement in the right direction. Consumers are feeling a tiny spring in their step – let's see next month if April showers dampen the mood."

IG says futures indicate the FTSE 100 index of large-caps to open 7,025.80 on Thursday. The FTSE 100 index closed up 0.6%, or 44.60 points at 7,044.74 on Wednesday.

"Having come off the back of a rather mixed session yesterday it seems rather apt that we could well be heading for a mixed open today," CMC Markets Chief Market Analyst Michael Hewson said.

"US markets were unable to shake off the jitters around the tech sector closing lower on the day," Hewson added, "as the tech juggernaut that has powered most of the gains in the US over the past two years, appears to be starting to misfire quite badly, with some of the biggest decliners from that sector, the so called FANG stocks of Facebook. Amazon, Apple, Netflix and Google. European markets also had a mixed session with the FTSE100 outperforming, while the DAX finished lower.

In the US on Wednesday, Wall Street ended lower, with the Dow Jones Industrial Average ending broadly flat, the S&P 500 down 0.3% and Nasdaq Composite closing 0.9% lower.

In Asia on Thursday, the Japanese Nikkei 225 index is up 0.7%. In China, the Shanghai Composite is up 0.7%, while the Hang Seng index in Hong Kong is up 0.2%.

In Japan, total value of retail sales jumped 0.4% on a seasonally adjusted basis in February, lagging economist forecasts of a 0.6% boost.

The Ministry of Economy, Trade and Industry said retail sales gained 1.6% on the year, short of forecasts for 1.7% following the downwardly revised 1.56% gain in January.

Sales from large retailers climbed 0.6% on year, missing forecasts for 0.9% but up from the downwardly revised 0.4% gain in the previous month.

To come in the economic calendar on Thursday, UK Nationwide housing prices are at 0700 BST and consumer credit due at 0930 BST, with Germany's consumer price index at 1300 BST and US personal spending and income data at 1330 BST, along with the core personal consumption expenditure index due at the same time.

In company news late Wednesday, NEX Group after the market close confirmed it has received a non-binding takeover proposal from CME Group, valuing NEX at a price of 1,000 pence per share.

Shares in NEX closed up 10% at 976.43p on Wednesday, giving it a market capitalisation of GBP3.71 billion. The proposal from CME would value NEX at GBP3.80 billion.

Discussions are at an advanced stage, NEX said, there can be no certainty that an offer will be made, nor as to the terms of any offer. Wednesday's announcement was made without the consent of CME, NEX added.

CME has until 1700 BST on April 12 to make a firm offer for NEX.

Royal Mail late Wednesday welcomed the vote from members of the Communications Workers Union which was "overwhelmingly" in favour of the pensions and pay deal proposed by the postal services firm.

Royal Mail said the union's members "voted overwhelmingly in favour of the agreement in principle on pensions, pay, a shorter working week, culture and operational changes."

The CWU reported its members voted 90.1% in favour of the deal.

Meanwhile, troubled alcoholic drinks wholesaler Conviviality on Wednesday said it has failed to raised the full GBP125.0 million needed to "adequately recapitalise the business".

"Despite a significant number of meetings with potential investors resulting in good levels of demand, and constructive discussions with a number of key customers and suppliers regarding the provision of support, there was ultimately insufficient demand to raise the full GBP125.0 million," Conviviality said in a statement.

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