27th Feb 2014 11:00
LONDON (Alliance News) - Stocks are lower across Europe Thursday, while the dollar is stronger, as investors grow increasingly concerned about the escalating situation in the Ukraine, as armed men seize government and parliament buildings in the Crimea region, raising the Russian flag.
"US dollar strength and general risk aversion is the general theme Thursday, as equity markets come under pressure due to uncertainty over events in Ukraine," said CMC Markets chief market analyst Michael Hewson.
By mid-morning Thursday, the FTSE 100 is down 0.9% at 6,739.50, the FTSE 250 is down 0.4% at 16,403.20, and the AIM All-Share is down 0.4% at 883.86.
European stocks are also significantly lower, with the CAC 40 down 0.8% and the DAX 30 down 1.3%.
A busy morning for European data has given mixed signals across the Eurozone. German unemployment improved by more than expected in February, dropping by 14,000, faster than the 10,000 expected by economists. The headline rate of unemployment in Europe's biggest economy remained stable at 6.8%.
The two-speed Eurozone economy has been on show again, however, with Spanish GDP missing expectations, recording a fall of 0.2% year-on-year in the fourth-quarter of 2013. Economists had forecast a fall of 0.1%.
The Eurozone M3 money supply, the broadest measure of the flow of money in an economy, rose by slightly more than expected to 1.2% year-on-year in January from 1.0% in December. The monthly eurozone consumer confidence and economic sentiment indicators from the European Commission also improved this month, in-line with, or better than, expectations.
The most important piece of European data, German CPI inflation, is still to come at 1300 GMT. Consumer prices in February are expected to have risen by 0.6% month-on-month, after having fallen by 0.6% in January. The harmonised index, or HCPI, which is most closely watched by the European Central Bank for interest-rate policy decision making, is expected to record 1.1% growth year-on-year in February, slipping from 1.2% in January.
"Today?s German CPI print will provide an indication of what to expect for tomorrow's Eurozone aggregate print", said market strategists at Lloyds Bank. "A weak inflation number today will no doubt raise market concerns of potential ECB action next week," the strategists say.
Following the mixed data so far, and as investors look for safe havens, the euro and the pound are both lower against the dollar, currently trading at USD1.3650 and USD1.6635 respectively.
In the UK, at the peak of the corporate earnings season, the FTSE 100 is being led lower by RBS, which has posted its worst loss since 2008. The bank reported its sixth consecutive annual pretax loss, while unveiling a business restructuring that further scales down its investment bank and narrows the bailed-out bank's focus to the UK. The bank's shares are now down 7.7%.
The media sector is underperforming the most, led lower by WPP, currently down 5.7%. Despite reporting a rise in pretax profits, WPP said foreign exchange is having a negative impact on its profit margins, which has led analysts to reduce their earnings forecasts for the advertising and media giant.
In the FTSE 250, Kazakhstan based miner Kazachmys is up by 15% after announcing its full-year results and some potential restructuring that Liberum Capital says could be very positive for the company. Kazakhmys shares are now up almost 50% since the start of February, having received a big boost earlier in the month after the Central Bank of Kazakhstan devalued its currency, effectively cutting the miner's local costs in foreign currency terms.
Man Group shares also have rocketed higher Thursday morning, currently up almost 12% after announcing earnings per share 53% ahead of consensus expectations. The beat to consensus numbers was mainly down to higher net performance fees, said Numis Securities.
After the German CPI numbers at 1100 GMT, US durable goods and initial jobless claims data are due at 1330 GMT, although many investors are still taking US data releases with a pinch of salt due to the recent poor winter weather there.
"US data remain weather-distorted so we'll try to ignore durable goods orders and jobless claims, said Societe Generale senior strategist Kit Jukes in a morning note to clients.
Investors also are waiting for US Fed Chair Janet Yellen to appear once again before Congress, as her second address, which had been scheduled for February 13, was postponed due to the bad weather. Investors are questioning whether the economic impact of the recent snow storms in the US could result in a pause to tapering of the Fed's bond-buying stimulus programme.
By Jon Darby; [email protected]; @jondarby100
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