2nd Apr 2014 06:39
LONDON (Alliance News) - UK stocks are called to open flat to fractionally higher Wednesday, following on from strong gains posted in the US on Tuesday and in Asia overnight.
Wall Street extended its recent gains Tuesday as comments made by Federal Reserve Chair Janet Yellen on Monday continued to support a risk-on sentiment. In an apparent retracing of her comments that followed the last Federal Open Market Committee meeting, Yellen said that the US economy will need "extraordinary support for some time to come", meaning continued low interest rates.
US equities also received a boost in the wake of some US manufacturing data Tuesday. The Institute of Supply Management revealed that its manufacturing purchasing managers index crept up to 53.7 in March, from 53.2 in February. Meanwhile, Markit Economics said its manufacturing PMI edged lower in March, but it remained unchanged from its initial flash estimate.
"Investors remain incredibly bullish, taking the opportunity to push up prices on lacklustre events," says Lee Mumford, senior sales trader at Spreadex.
This sentiment has rolled into the Asian session where, ahead of the UK equity market open, the Hang Seng and Shanghai Composite index are up 0.3% and 0.5%, respectively, and the Nikkei in Tokyo has closed up 1.1%.
In the UK, both IG and CMC Markets expect the FTSE 100 to open flat to ever-so-slightly higher Wednesday. IG indicates that the blue-chip index will open up at approximately 6,655 points, while CMC indicates it to open flat, having closed at 6,652.61 on Tuesday
In data just released, amid growing concerns of a UK housing bubble, Nationwide house price data revealed that the value of homes in the UK increased at the fastest pace since May 2010. House prices advanced 9.5% in March from last year, following a 9.4% rise in February. However, this missed the 9.6% increase that economists had been expecting.
On a monthly basis, house prices gained 0.4%, which was slower than the 0.7% increase posted in February and 0.8% growth forecast by economists.
Still ahead in the data calendar, the UK construction purchasing managers' index is scheduled for 0830 GMT. Economists' expect the index to rise to 63 in March, up from the 62.6 posted in February. The final reading of fourth quarter gross domestic product for the eurozone is released at 0900 GMT, at the same time as producer price inflation information for the euro area.
"Given the drop below consensus in consumer prices seen on Monday the door is open to another negative shock on the producer-side," says Jasper Lawler, market analyst at CMC Markets.
In the US, mortgage applications data are released at 1100 GMT. Ahead of Friday's non-farm payrolls print, ADP private sector employment figures for March will be in focus Wednesday. The print is released at 1215 GMT, shortly before the ISM New York index at 1345 GMT and factory orders numbers at 1400 GMT.
Later on, the St. Louis Federal Reserve President James Bullard gives a speech at 2000 GMT.
In corporate news, FTSE 250-constituent Domino's Pizza Group has released an interim management statement, while ASOS, the largest company in the AIM All-Share index by market capitalisation, has released full-year results.
By James Kemp; [email protected]; @jamespkemp
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