25th Feb 2014 13:34
LONDON (Alliance News) - Stocks across the UK and Europe continue to trade firmly lower Tuesday, with the US markets looking set to offer little positivity at the opening bell. On Monday US stocks opened strongly, the S&P500 rallied to an all time intraday high, and boosted the FTSE 100 to its highest close since 1999. However with equity markets in the UK, Europe, and the US, once again testing new levels, the rally has lost momentum and US stocks look set to follow Europe lower Tuesday.
Futures trading indicates that the DJIA, the S&P 500 and the Nasdaq Composite will all open about 0.2% lower.
Heading toward the Wall Street open, the FTSE 100 is down 0.9% at 6,801.57, the FTSE 250 is down 0.5% at 16,457.18, and the AIM All-Share is down 0.2% at 890.86.
In Europe, the DAX and the CAC 40 are both down 0.5%.
The European Commission has released its latest economic forecasts for 2014, raising its UK economic growth forecast to 2.5% from 2.2%. It cut its unemployment forecast for the UK to 6.8% from 7.5%, and it cut its UK inflation forecast to 2.0% from 2.3%.
Germany's 2014 GDP forecast was raised to 1.8% from 1.7%, while the eurozone as a whole is now forecast to grow by 1.2% this year, up from 1.1% previously. Notably within Europe, Italy had its growth forecast for 2014 downgraded to 0.6%, from 0.7% previously.
The EC left its forecast for China's GDP growth unchanged, at 7.4% in both 2014 and 2015.
The markets seem to be a little more concerned than the EC over a potential growth slowdown in the worlds second largest economy, which is evidenced Tuesday within UK equities where metal and mining stocks continue to under-perform following headlines that Chinese banks may be tightening up on lending.
Tesco shares spiked to an intra-day high early afternoon on the news that the supermarket group plans to reduce its capital expenditure to no more that GBP2.5 billion per year for at least the next three financial years. Shares have since slipped back however and now trade down 0.6% Tuesday. The industrial metals sector is down 3.6% and the mining sector is down 2.3%.
CRH PLC continues to be the stand-out blue-chip gainer Monday, up 4.0% after announcing results that were in line with expectations, along with plans for streamlining operations as part of its ongoing portfolio review.
The dollar is slightly softer against other currency majors leading into the open of US equities and ahead of some US data releases. Currently the pound buys USD1.6700 and the euro buys USD1.3758.
The main US economic release Tuesday is the monthly Conference Board consumer confidence survey for February. Economists expect a slight slip in confidence levels, forecasting a reading of 80.0, down from 80.7 in January. Some analysts are beginning to question the validity of the reading however, as in recent weeks it has been running in the opposite direction to other key economic statistics.
Over the past four months US retail sales and personal consumption numbers have been trending lower, while at the same time consumer confidence has been rising, points out CMC Markets chief market analyst Michael Hewson. The lack of correlation means the confidence number, "is becoming increasingly meaningless," said Hewson.
The Richmond Fed manufacturing index February is due at at 1500 GMT.
Federal Reserve board member Daniel Tarullo is also due to speak Tuesday. "Recent commentary from members of rate-setting FOMC committee has uniformly favoured continued ?tapering? of QE asset purchases, a view Mr. Tarullo is likely to support as well," says DailyFX currency analyst Iilya Spivak.
By Jon Darby; [email protected]; @jondarby100
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