15th Oct 2014 06:37
LONDON (Alliance News) - UK stocks are set to open lower Wednesday amid continuing underlying concerns about the health of the European economy and lower-than-expected Chinese inflation.
Futures indicate the FTSE 100 to open 7 points lower at 6,385.8 The index closed at 6,392.68 on Tuesday.
London stock indices opened lower but reversed losses into gains for the second day in a row on Tuesday, this time spurred by some positive earnings from big corporate names in the US, including Citigroup. However, it is Europe that is again the focus for investors on Wednesday morning.
"The rebounds continue to remain tepid though, and this probably underscores an underlying concern about the overall economic outlook heading into year-end, which was underlined by another poor German economic number [Tuesday], and some weak Chinese inflation data earlier this morning," says CMC Markets' chief market analyst Michael Hewson.
German consumer prices for September met the consensus to show no change from August's reading. Consumer price index showed a 0.8% rise year-on-year, but flat month-on-month, fuelling more concerns about the nation's economy.
Chinese consumer prices slowed slightly more than expected in September, figures from the National Bureau of Statistics showed. Consumer prices grew 1.6% year-over-year, following the 2% rise in August, marking the second consecutive month of slowing. Economists had expected inflation to slow to 1.7%.
"Looking ahead, we expect broad price pressures to remain subdued. That said, consumer price inflation remains highly sensitive to pork prices, which look set to rise on the back of the fall in pig stocks since the start of the year," Julian Evans-Pritchard, China economist at Capital Economics, says.
Asian trading has been positive early Wednesday with the Japanese Nikkei closing up 0.9%, the Hang Seng continuing up 0.6% and the Shanghai Composite trading up 0.4%.
Trading in the US fell back slightly after a strong open Tuesday. The DJIA closed fractionally lower, the S&P 500 ended up 0.2%, and the Nasdaq Composite closed up 0.3%.
FTSE 100 miner Fresnillo said Wednesday it is on track to meet full-year guidance for 43 million ounces of silver, after production in the metal was broadly flat in the third quarter from the comparable period in 2013. However, production in gold fell 4.4% in the third quarter, primarily due to the stoppage at the Soledad-Dipolos mine, in Sonora, the company said.
Irish drug company Shire said it thinks Abbvie Inc should proceed with its recommended takeover offer for the company, and noted that Shire would be due a break fee of about USD1.64 billion if the deal is called off. US drug maker AbbVie said late Tuesday that it intends to reconsider the recommendation made to its shareholders to adopt the takeover agreement to acquire Shire amid proposed tax rule changes in the US. It has sent Shire a notice about its intention to withdraw or modify its recommendation.
Still ahead on Wednesday is UK ILO unemployment, claimant count and average earnings figures, to be released at 0930 BST. Investors will be paying close attention to the earnings figure as Bank of England Governor Mark Carney said that wage inflation will be a key determinant for when the bank will hike interest rates.
The US will release a host of data later on, the highlight being retail sales for September at 1330 BST.
ECB President Mario Draghi will be a busy man Wednesday, making a speech at the seventh Statistics Conference organised by the ECB in Frankfurt, at 0800 BST, before giving another speech at the grand opening event of the European Cultural Days 2014, also in Frankfurt at 1900 BST.
By Neil Thakrar; [email protected]
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