8th Apr 2014 06:40
LONDON (Alliance News) - UK stocks are set to open firmly lower Tuesday, extending the sharp losses posted on Monday, as another weak close on Wall Street weighs heavy on investor sentiment.
Europe's major equity indices all closed in negative territory Monday, led lower by technology stocks, following on from an equity sell-off in the US, and in particular in the tech-heavy NASDAQ Composite, on Friday.
This looks set to continue into Tuesday following yet another sharp decline on Wall Street on Monday. The DJIA, NASDAQ Composite, and S&P 500 all closed between 1.1% and 1.2% lower.
Both IG and CMC Markets indicate the FTSE 100 to open sharply lower Tuesday. IG expects the UK's blue-chip index to open down at approximately 6,608 points, having ended at 6,622.84 on Monday, while CMC Markets indicates it to open even lower at around 6,597.
The crisis in Ukraine also is having a negative impact on sentiment. "The situation in Ukraine continues to have the potential to unravel at a moment?s notice after unrest in the Eastern and pro-Russian part of the country at the weekend, saw calls for a referendum on May 11 in Donetsk, with unrest also reported in Kharkiv and Luhansk," says Michael Hewson, chief market analyst at CMC Markets.
In the latest developments, the Ukrainian government late on Monday accused Russia of stirring up the weekend's unrest as a preamble for another military incursion. "The enemies of Ukraine are playing the Crimean scenario, but we won't let this happen," said acting Ukrainian President Oleksandr Turchynov.
Russia's annexation of Crimea last month started with similar protests by ethnic Russians.
The US government was quick to support these claims, saying there was "strong evidence" that some of the pro-Russian demonstrators were "paid and were not local residents."
In data already released Tuesday, the British Chambers of Commerce has revealed that UK service sector exports rose to an all-time high in the first quarter. Both export balances in the services sector improved in the first quarter, with the export sales rising 38% and export orders 39%.
"The results of our survey suggest that growth is strengthening in the short term, and support our recent forecasts that the economic recovery is moving at a solid pace," says David Kern, chief economist at the BCC.
In Asia, the Bank of Japan has left its monetary policy unchanged and has maintained its upbeat economic outlook even after the government raised the sales tax this month for the first time since 1997.
"Attention will now turn to what BoJ Governor Haruhiko Kuroda has to say about the economy following the tax increase at a planned news conference," says CitiFX Wire's Nishtha Asthana. The conference is currently taking place.
Also still to come in the data calendar, French trade data is due at 0645 GMT, ahead of UK industrial and manufacturing production data for February at 0830 GMT. Economists forecast that both industrial and manufacturing output in the UK will expand by 0.3% month-on-month in February, having increased 0.1% and 0.4%, respectively, in January,
In the US, "with the lingering uncertainty about the underlying momentum of US growth in the face of weather-related disruptions, the NFIB Small Business Optimism Index for March is likely to attract more scrutiny than normal," says Jonathan Thomas, senior economist at Lloyds Bank. The index, which is released at 1130 GMT, is expected to rise to 92.3 in March, up from the 91.4 recorded in February. The US Redbook index is released at 1255 GMT.
Later in the day, the National Institute of Economic and Social Research releases UK gross domestic product data at 1400 GMT.
After the UK equity market close, and ahead of the release of the latest Federal Open Market Committee policy meeting minutes on Wednesday, President of the Minneapolis Federal Reserve Bank Narayana Kocherlakota gives a speech at 1730 GMT.
In corporate news Tuesday, FTSE 250-listed Victrex has released a trading statement, while Ferrexpo has released its first-quarter results.
By James Kemp; [email protected]; @jamespkemp
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