16th Oct 2014 06:32
LONDON (Alliance News) - UK stocks are set to open higher Thursday as European markets look to recover some of their losses after taking a battering on Wednesday as investors dumped equities and bought government bonds amid concerns over slowing global growth. Eurozone consumer price inflation data will be a key focus of the morning session.
Futures indicate that the FTSE 100 will open 30 points higher at 6,242.
The slightly higher open is perhaps unsurprising given that the UK's leading index suffered its worst one-day fall of the year on Wednesday, shedding 181 points, or 2.8%, as investors fretted about weak economic growth booth in Europe and the US, as well as the potential impact of the spread of the Ebola virus.
US markets were extremely volatile at the open on Wednesday, with the DJIA and the S&P 500 plunging to their lowest levels since February at the opening bell before recovering a little and ultimately ending lower, down 1.1% and 0.8%, respectively. The Nasdaq Composite managed to outperform, ending 0.3% higher.
Asia markets have gone on to be volatile as well so far Thursday, with the Nikkei ending down 2.3%, while the Hang Seng continues down 0.7%, and the Shanghai Composite continues up 0.3%.
Part of the concern across global markets is the continued fall in the price of oil, which has been on an unstoppable slide for the last few weeks. Brent crude has continued lower again overnight, and ahead of the European equity market open trades at a fresh recent low of USD83.09 per barrel.
While equity markets around the world fell Wednesday, a "flash-crash" in bond yields saw the 10-year US Treasury yield fall below 2.0%, while UK and German yields also fell to their lowest level of the year, as investors bid bond prices higher in their flight to safety.
Meanwhile, in the eurozone periphery, such as Greece, bond yields widened, highlighting the concerns about the single currency block as hope that the European Central Bank will continue to do "whatever it takes" to prop up growth in the region start to dim.
Given the focus on the economic slowdown taking place in the eurozone, investors will be closely watching the September eurozone consumer price inflation data when it is released at 1000 BST. The expectation is for consumer prices to have risen by 0.3% year-on-year over the month, down from the 0.4% growth recorded in August. Data on Wednesday showed that consumer prices in the eurozone stagnated for the second consecutive month in September, so any price expansion in the region is no longer coming from it's traditional powerhouse.
There's no data from the UK scheduled Thursday, but there is a raft of releases from the US later in the session, including a number of appearances from Federal Reserve officials. Atlanta President Dennis Lockhart speaks at 1400 BST, followed by Minneapolis President Narayana Kocherlakota at 1500 BST, and St. Louis President James Bullard at 1800 BST.
"Expect overt attempts to talk up the US economy and markets, though the effectiveness of that approach is open to question when the Fed?s view has been so openly challenged by the market already," says Rabobank market analyst Michael Every.
From the UK corporate calendar Thursday, drinks giant Diageo has released an interim statement, showing that its volumes were down 3.5% in the first quarter, with organic net sales down 1.5%.
Polymetal International has released a third quarter production update, while BHP Billiton has confirmed it's looking to pursue a London listing for a new demerged company. Meanwhile, amongst others, British Sky Broadcasting has released first quarter results, and Man Group has put out an interim statement.
By Jon Darby; [email protected]; @jondarby100
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