25th Mar 2015 07:37
LONDON (Alliance News) - London share prices are set to open lower Wednesday, following a decline on Wall Street Tuesday, as analysts expect this, combined with a dearth of significant economic data scheduled for the day, as leading to some correction from recent gains.
IG futures indicate the FTSE 100 to open 5 points lower at 1,014.3. On Tuesday, the FTSE 100 hit a new intraday record high of 7,065.08, but then lost ground and eventually ended down 0.3% at 7,019.68. The blue-chip index failed to make a new closing high and snapped a six-day winning streak, with energy and mining stocks again amongst the worst-performing shares after some weak Chinese economic data.
"A negative lead from the US combined with mixed moves in Asia overnight appears to be weighing on European futures ahead of the open. The lack of many significant economic data or news flow won?t be helping matters and may well provide the backdrop for consolidation in the markets this week," says Oanda senior market analyst Craig Erlam.
In NY on Tuesday, the DJIA closed down 0.6%, the S&P 500 down 0.6%, and the Nasdaq Composite down 0.3%. US stocks came under pressure over the course of the trading day on Tuesday after moving modestly higher earlier in the session.
The pullback on Wall Street was partly due to renewed concerns about the outlook for interest rates on the heels of some upbeat housing data. The US Commerce Department released a report earlier in the day showing that new home sales surged by 7.8% to an annual rate of 539,000 in February from the revised January rate of 500,000. The increase came as a surprise to economists, who had expected new home sales to drop to a rate of 462,000 from the 481,000 originally reported for the previous month.
Meanwhile, Asian markets are mixed Wednesday. The Japanese Nikkei 225 closed up 0.2%, and the Hang Seng trades up 0.4%, while the Shanghai Composite is trading down 0.9%.
"We?ve had a lot to take in over the last few weeks with the Fed?s view on the economic outlook appearing to soften and the ECB beginning its QE program taking most of the headlines. The first quarter earnings season is next and people are not optimistic as the strength of the dollar in particular is expected to be a major drag on earnings," Erlam writes.
Following a drop against the greenback on Tuesday, the euro and the pound are slightly higher against the US dollar Wednesday morning, with the euro trading at USD1.0926 and the pound at USD1.4864.
Brent crude is quoted at around USD54.79 a barrel Wednesday, and US benchmark West Texas Intermediate is quoted at USD47.04 a barrel. Gold is quoted early Wednesday at USD1,189.10 an ounce.
In Europe, Greece will present a list of economic reforms by next week, a government spokesman said. "We will present the reforms at the latest by Monday," Gabriel Sakellaridis told private Mega television. The proposed reforms will not include measures that hamper growth and will focus on structural changes, Sakellaridis said.
The announcement came after German Chancellor Angela Merkel and Greek Prime Minister Alexis Tsipras held a five-hour meeting on Monday in Berlin which led to no apparent breakthrough on the disbursement of Greece's bailout loans.
Amongst UK corporate news, Hong Kong billionaire Li Ka-shing's Hutchison Whampoa agreed to acquire Spanish telecom operator Telefonica's UK mobile business O2 for about GBP10.25 billion, including deferred upside interest sharing payments of up to GBP1 billion. The deal is expected to close by the end of June 2016.
The deal will see the combining of Britain's second-largest wireless provider O2 with Britain's fourth-largest wireless carrier 3 UK, which is owned by Hutchison. Telefonica owns O2, which it acquired in early 2006. The deal will create the no 1 mobile operator in the UK with almost 33 million customers on a combined basis.
United Utilities said trading in the current financial year is in line with expectations and said revenue and operating profit will be "slightly higher" than last year. The FTSE 100 water and sewage service provider said revenue is expected to increase in the year, which ends on March 31, due to the regulated price allowance for 2014 to 2015, partly offset by the impact of a previously announced one-off special customer discount of around GBP20 million.
Moneysupermarket.com Group confirmed on Tuesday that founder Simon Nixon is set to sell a 6.4% stake in the company, raising around GBP100 million. Nixon, who is currently the deputy chairman of the FTSE 250-listed price comparison site, will sell 35 million shares in the company, according to an announcement made by Citigroup Global Markets which was later confirmed by Moneysupermarket. Moneysupermarket shares closed at 286.00 pence on Tuesday, meaning Nixon would raise GBP100.1 million via the placing at that price.
In the economic calendar Wednesday, German IFO business climate data is due at 0900 GMT, while UK BBA Mortgage approvals data is at 0930 GMT. In the US, Durable Goods orders data is at 1230 GMT, while EIA Crude Oil Stocks change is at 1430 GMT.
By Daniel Ruiz; [email protected]
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