7th Apr 2014 09:47
LONDON (Alliance News) - European stocks markets are lower Monday, with the technology sector leading the sell-off, in a similar pattern to the adjustment seen in US markets late on Friday, while worries of a further encroachment into Ukraine by Russia also are hampering investor sentiment.
The FTSE 100 fell sharply on the market open to trade almost 1.0% lower in early trade. By mid-morning Monday, the leading index has recovered from its low but is still down 0.3% at 6,673.56. The FTSE 250 is down 0.7% at 16,324.78, while the AIM All-Share is down 0.2% at 851.75.
Within major European markets, the CAC 40 is down 0.7%, and the DAX 30 is down 1.2%.
European markets appear to be tracking the late Friday sell-off in US equities that was started by the non-farm payroll jobs report, which, while relatively robust at a 192,000 gain in March, was slightly lighter than the 200,000 expected.
The reports previous revisions also raised questions over the impact of the winter weather that had previously been blamed for a run of poor data in the US. Rather than accelerating out of a slump, the March print was lower than expected, while the January and February numbers were revised higher to 144,000 and 197,000 respectively, in a net upward revision of 37,000 jobs.
Analysts suggest that the US jobs report shows both that the winter freeze had less impact on job creation than previously thought, but also that growth remains muted compared to pre-crisis levels.
The market reaction was to send stocks lower from their near record highs in the US on Friday, although analysts note that there was not a huge outflow from equities as an asset class, but rather a shift between so called "momentum stocks" to the more defensive stocks.
The momentum stocks, such technology stocks that have been attracting investment because of their rapid price rises, led the falls in the US on Friday, with Facebook losing 4.6% and the technology-heavy Nasdaq Index closing down 2.6%.
A similar picture has emerged within UK equities Monday, with the FTSE 350 Technology Hardware & Equipment sector leading the falls, down 2.5%. Imagination Technology is down 5.6%, Pace is down 2.5%, and ARM Holdings is down 2.3%.
The FTSE 350 Construction & Materials sector is showing the best gains, up 1.1%, led by CRH, up 1.6%.
The traditional defensive sectors such as Tobacco and Beverages are holding up reasonably well in an otherwise falling market, flat and up 0.1% respectively. Diageo is outperforming despite going ex-dividend Monday, up 0.2%.
A relatively quiet morning in the data calendar has provided little to shift investor sentiment. The eurozone Sentix Investor Confidence survey rose to 14.1 for April from 13.9 for March. That's the fifth consecutive improvement in the survey, signalling the highest levels of investor confidence since April 2011.
In the UK, household expectations of prices over the coming year fell to a two-year low in March, according to the Lloyds Bank consumer confidence barometer. Some 70% of households expect higher prices over the coming year, compared with 74% in February. Despite the lower inflation expectations, interest rate expectations edged higher to 52, from 50.
Currency majors remain fairly stable amid the dearth of top tier macro data. The pound is flat against the dollar at USD1.6578, while the euro is slightly higher at USD1.3714.
Investors will have one eye on Ukraine following the weekend demonstrations by pro-Russian activists calling for a Crimea-style referendum in eastern parts of the country that border Russia. The protesters have seized official buildings in the cities of Kharkiv, Luhansk and Donetsk.
The price of oil is lower Monday, with Brent down to USD105.61 per barrel. Prices have eased following a weekend agreement between the Libyan government and rebels to open up previously restricted oil terminals "step-by-step", says Commerzbank.
However the Commerzbank analysts suggest that the step-by-step nature of the opening may disappoint compared to previous expectations of a full opening, putting upward pressure on oil prices as the week goes on. Moreover, any escalation of tensions in Ukraine, followed by any tightening of western sanctions, has the potential to send oil and gas prices sharply higher, notes Commerzbank.
With an empty economic calendar for the rest of Monday, the next potential catalyst for UK stock indices could be the start to trading of the US markets, which futures currently indicate are headed for a lower start.
By Jon Darby; [email protected]; @jondarby100
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