28th Mar 2014 12:21
LONDON (Alliance News) - US stocks look set to follow Europe higher Friday ahead of key German inflation data, while the UK's indices have been dragged back to near-flat by heavy declines in the Life Insurance sector.
Markets appear to have shaken off Ukrainian concerns for the time being, although investors will have one eye on developments. Leading in to the US open, President Barack Obama, who is travelling in Europe, has reportedly reiterated the warning that Russia must move back troops from Ukraine's border and de-escalate the situation.
The futures markets indicate that the DJIA and the S&P 500 will both open about 0.3% higher, while the Nasdaq, buoyed in part by Blackberry, will open 0.5% higher.
Ahead of the opening bell, smartphone maker Blackberry has reported a fourth-quarter earnings per share loss of 8 cents, considerably better than the 57 cents per share loss that has been expected by analysts.
Major European markets are broadly holding onto early gains, with the CAC 40 up 0.4%, and the DAX 30 up 0.8%.
In the UK, the FTSE 100 has been dragged back from a morning peak of 6,631.34 to trade just slightly higher on the day, currently at 6,600.40. The FTSE 250 is now down 0.1%, while the AIM All-Share is outperforming, up 0.5%.
UK stock indices are being held back by life insurers, with the FTSE 350 sector now down 5.0% in reaction to the news that the UK Financial Conduct Authority is about to start a massive inquiry into up to 30 million policies sold from in the years prior to 2000. Full details are expected from the regulator on Monday.
FTSE 100-component Resolution limited is now down 15%, while FTSE 250-stock Phoenix Group is down more than 20%. It is the second significant shock in as many weeks for the UK life insurance industry, following the annuity shake up announced as part of the UK government budget last week. The whole FTSE 350 Life Insurance sector has now had 10% wiped off its value since before the budget.
The euro has recovered from a monthly low against the dollar of USD1.3703 after falling sharply on release of weak Spanish consumer price inflation data earlier in the morning. The data showed a drop of 0.2% year-on-year in March - the first drop since 2009.
European Central Bank president Mario Draghi has repeatedly indicated in more recent appearances that any further policy easing, whether in the form of negative deposit rates, quantitative easing, or something else, will mainly depend on the inflation outlook, hence the strong reaction to the Spanish inflation data.
The euro has since recovered from the low, currently trading at USD1.3740, but all eyes will be on the German CPI print at the unusual afternoon time of 1300 GMT.
Annual CPI is expected to have slowed slightly to 1.1% in March, from 1.2% in February, while monthly CPI is also expected to have slowed also to 0.4% from 0.5% previously. The harmonised index, which the ECB tends to look closest at for policy decisions, is expected to remain stable on an annual basis in March, at 1.0%.
Analysts remain mixed over the likelihood of any further policy easing by the ECB. "I would love to believe that the ECB is close to further easing," said Societe Generale strategist Kit Jukes, "But I worry the current bout of ECB chatter is just that," the strategist said.
Either way the market now eagerly awaits the German CPI data, ahead of the eurozone print on Monday and the next policy meeting on Thursday next week.
Also still to come Friday, US personal spending and consumption numbers at 1230 GMT, the Reuters/Michigan consumer sentiment index at 1455 GMT, as well as a speech later in the afternoon from Kansas Fed President Esther George.
By Jon Darby; [email protected]; @jondarby100
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