2nd Jul 2014 06:41
LONDON (Alliance News) - UK stocks are set to open fractionally lower Wednesday following the strong gains made on Tuesday, while the pound remains at multi-year highs against the dollar in the wake of Tuesday's stronger than expected manufacturing sector PMI and another strong reading of UK house prices already released Wednesday.
US markets continued higher on Tuesday, with the S&P 500 gaining 0.7% to record a new high close of 1,973.32, and the DJIA gaining 0.8% to close at 16,956.07. Those gains continued into the Asian session Wednesday, where the Nikkei has closed up 0.3%, the Hang Seng is up 1.0% and the Shanghei Composite fractionally higher.
UK investors are expected to pause for breath Wednesday, however, with indications suggesting that FTSE 100 will open fractionally lower. After closing on Tuesday at 6,802.92, CMC Markets and Alpari are calling the leading index to open between 2 points to 8 points lower.
The UK manufacturing PMI Tuesday rose to its highest level since November 2013 at 57.5 in June, compared with 57.0 in May, beating economists' estimates that the index would dip to 56.8. The better-than-expected data sent the pound to a near six-year higher against the dollar of USD1.7166.
The pound remains near that elevated level ahead of the equity market open Wednesday, at USD1.7158, as the latest reading of the UK housing market indicated house prices surpassed their pre-recession peak in the second-quarter. The Nationwide house price index rose by 11.8% year-on-year in June, up from 11.1% in May and exceeding the expectation for a rise of 11.2%. On a monthly basis prices rose by 1.0%, up from 0.7% in the previous month and exceeding to expected 0.6% rise.
The data may put the housebuilders back in focus Wednesday, as does a trading statement from FTSE 100 constituent Persimmon, which has reported revenue up 33% in its first half on a year before, in part due to booming prices for home sales.
UK construction PMI data is due later in the morning, at 0930 BST. Growth in UK construction has been slowing a little over the last few months from its January peak of 64.6 to last month's reading of 60.0. CMC Markets expects a reading of 59.7, which would be an eight month low, although still a very strong reading.
Also in the data calendar Wednesday, Eurozone GDP numbers are due at 1000 BST, with an unchanged 0.2% first-quarter growth rate, and 0.9% year-on-year growth expected.
In the US, the Mortgage Bankers Association releases its MBA mortgage applications data at 1200 BST. Employment change data is released by the Automatic Data Processing Inc at 1315 BST, ahead of the ISM New York index at 1445 BST and factory orders information at 1500 BST.
Federal Reserve Chair Janet Yellen is due to give a speech on central banking at 1600 BST.
Elsewhere in the UK corporate calendar Wednesday, Tullow Oil has released a trading statement, along with Carillion and Kier Group, while Topps Tiles has released an interim management statement.
By Jon Darby; [email protected]; @jondarby100
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