27th Mar 2014 07:39
LONDON (Alliance News) - UK equities are set to open in the red Thursday, following a poor close on Wall Street on Wednesday.
US equities moved broadly higher at the start of trading, before interest waned and the early gains were reversed. Eventually, the DJIA closed down 0.6%, the S&P 500 closed down 0.7%, and the NASDAQ Composite closed down 1.4%.
While some speculated that it was an aggressive speech by US President Barack Obama about the crisis in Crimea that sparked the reversal of sentiment, "Iâ??d offer up a rebalancing of risk ahead of quarter end instead," said Spreadex's David White.
"If the marketâ??s eye had been on Ukraine and had been concerned, the Dax (which closed up 1.2%) should have underperformed much more than it did given recent correlations on that sort of news," White added.
Following the weak finish on Wall Street, UK stock are expected to open significantly lower Thursday, "as fickle investors continue to try and determine the next move in these sentiment-driven rangy markets," said Michael Hewson, chief market analyst at CMC Markets.
Both IG and CMC Markets indicate the FTSE 100 to open firmly lower at approximately 6,575 points, having closed at 6,605.3 points on Wednesday.
In the data calendar Thursday, French consumer confidence and Italian business confidence numbers are released at 0745 GMT and 0900 GMT, respectively. UK retail sales data for February are released at 0930 GMT.
The 1.5% drop in January's month-on-month UK retail sales volumes suggested that retail activity began the year on a weak note. However, according to FXStreet.com, economists expect February's reading to bounce back with an increase of 0.5%.
This, however, is not a view shared by all. "Despite signs of aggressive discounting, evidenced by a drop in the British Retail Consortium shop price index, we forecast sales volumes to have posted a second consecutive monthly fall," said Rhys Herbert, senior international macroeconomist at Lloyds Bank.
The economist forecasts that the reading will show a decline of 0.2%.
In the US, jobless claims data, personal consumption expenditure figures and GDP information are released at 1230 GMT, ahead of pending home sales data at 1400 GMT. The Kansas Federal Reserve manufacturing activity survey is scheduled for 1500 GMT.
In corporate news, banking companies may be in focus Thursday after the US Federal Reserve rejected the capital plans of five large banks - including the US units of HSBC Holdings and the Royal Bank of Scotland - following its latest stress test after the UK stock market close on Wednesday.
Two other major US banks, Goldman Sachs Group and Bank of America, passed the stress test only after reducing their requests for buybacks and dividends. The Fed approved the plans of 25 other banks.
Meanwhile, FTSE 100-listed Compass Group and London Stock Exchange Group and FTSE 250-constituent Thomas Cook Group have released trading statements ahead of the UK equity market open Thursday.
FTSE 250-listed Afren has released full-year results.
By James Kemp; [email protected]; @jamespkemp
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