1st Apr 2014 09:39
LONDON (Alliance News) - Major stocks indices are higher across the UK and Europe Tuesday, while the pound as dipped against the dollar following a weaker-than-expected reading of the UK manufacturing industry.
The FTSE 100 is up 0.4% at 6,627.10, the FTSE 250 is up 0.4 at 16,338.62, while the AIM All-Share is down 0.2% at 849.44.
The UK Markit manufacturing Purchasing Managers Index eased to an eight-month low of 55.3 in March, falling from 56.2 in February, disappointing economists that were looking for a further increase in activity and a reading of 56.9.
"The latest manufacturing PMI is likely to disappoint the markets, coming more than a full index point below expectations," said Markit senior economist Rob Dobson. "But it's important to remember that this is in the context of the super-strong, near-record growth rates seen in the second half of last year," the economist said.
UFXMarkets managing director Dennis De Jong says that although UK manufacturing "fell at the last hurdle" in March, now isn't the time to be disheartened. "The sector, that counts for a tenth of the UK?s economic output, has witnessed stronger order growth than all of its major European peers for the majority of this year and investors should remain confident it can bounce back in four weeks? time," De Jong says.
In Europe, the manufacturing sector also broadly eased slightly, with the eurozone wide Markit PMI recording 53.0 for March, in line with expectations, down from 53.2 in February. The German print came in at 53.7, down from 54.8 in February, and slightly lower that the 53.8 in February.
Although the French manufacturing sector continues to lag Germany's, the French print from Markit was notable as it showed the manufacturing sector there in expansion for the first time in more than two years. The reading came in at a respectable 52.1, beating forecast of 51.9, up from 49.7 in February.
German unemployment fell faster than expected, with number of people unemployed in Europe's largest economy shrinking by 12,000 in March, more that the 10,000 expected. The February fall also was revised slightly higher to 15,000 from 14,000. This pulled the headline unemployment unexpectedly down to 6.7%, from 6.8% in February.
Unemployment in the single currency region as a whole remained stable in February at 11.9%. Economists had expected a slight increase in unemployment to 12.0%.
"Slack in the eurozone is gradually starting to decline as growth returns and optimism improves," said Berenberg economist rob Wood.
The effect of the morning's data on the currency market has been to send the euro higher and the pound lower. Against the dollar, the euro trades at USD1.3795 and the pound trades at USD1.6647.
Major European equity indices are higher along with the UK's FTSE 100, with the CAC 40 up 0.6%, and the DAX 30 up 0.5%.
The final reading of fourth-quarter GDP on Wednesday, and eurozone retail sales on Thursday will be the final pieces of major data for the European Central Bank to take into consideration ahead of its policy decision in Thursday afternoon.
Ahead of the central bank meeting, the consensus is that ECB President Mario Draghi will continue to resist any change in policy for now. "The ECB has ammunition to look through the lower than expected March inflation numbers," said Bank of America Merrill Lynch head of developed Europe economics Laurence Boone. However, "the ECB will have no more excuses in April if inflation disappoints again," the economist says.
Within moving UK equities Tuesday, Aberdeen Asset Management is the biggest blue chip gainer, leading the FTSE 100 higher after saying that its net outflows slowed in March. It reported GBP3.9 billion in net outflows across its asset classes between the end of 2013 and the end of February, but estimated that net outflows slowed to GBP200 million in March. The stock is up 6.0%.
Babcock International share are up 4.0%. After leading the gainers on Monday after being awarded a nuclear decommissioning contract, the group has been named at the preferred bidder for a 21-year contract to manage London Fire Brigade's vehicle fleet.
Amid a much lighter corporate calendar than recent sessions, ICAP have also updated the market with a statement saying its trading is in line with expectations. ICAP shares are up 2.8%.
Still to come Tuesday, analyst and investors are waiting to find out if US economic data is about to turn a corner after weeks of disappointments that have been blamed of the weather.
The US Markit manufacturing PMI for March is due at 1258 GMT, followed by the ISM manufacturing PMI at 1400 GMT. Analysts expect the ISM number to improve to 54.0 in March, from 53.2 in February.
Construction spending data is also due at 1400 GMT, with a month-on-month increase of 0.2% expected in February, after a 0.1% increase in January.
The futures market indicates stocks on Wall Street are heading for a marginally higher open.
By Jon Darby; [email protected]; @jondarby100
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