25th Oct 2013 12:49
LONDON (Alliance News) - US stocks are expected to open relatively flat Friday, while UK and European markets struggle amid a lack of any meaningful catalysts to drive them higher.
Ahead of the New York bell, the FTSE 100 is up 0.1% at 6,716.2, the AIM All-Share is up 0.1% at 801.38, while the FTSE 250 is down 0.3% at 15,480.35. In Europe, the French CAC is flat at 4,275.56, while the German DAX is up 0.2% at 8,995.3
London's major indices are trading in tight ranges Friday despite the UK Office for National Statistics reporting that GDP grew at its fastest rate since 2010, growing by 0.8% in the third quarter from the previous quarter, faster than the 0.7% increase in the preceding three months and in line with economists' expectations.
The report has divided opinion. Citi's UK Economist Michael Saunders is positive. "GDP is rising at an annualised pace of about 3% quarter-on-quarter in the last couple of quarters. I expect it will remain about that pace in coming quarters. My forecasts for 2014 growth is 3.0%. Business surveys suggest it could be even better. The consensus for 2014 GDP growth is just 2.2%, which requires the economy to slow significantly. I think the consensus is way too low. The UK is set for strong and above-consensus growth."
Others, however, remain more cautious. Kathleen Brooks, research director at FOREX.com warned that despite recording the best numbers since 2010, "now is no time for celebration. From peak to trough in 2009, it has been a steep uphill climb since then, and although the worst leg of the journey may be behind us we still have further to go."
The reaction of the pound was limited, says Lee Oliver from CitiFX Wire. In the immediate aftermath of the results, sterling reached a high of USD1.62390, before dropping off, currently trading at USD1.6184.
Similar muted sentiment is shared in the US. Ahead of the New York bell, Wall Street appears cautious as both the S&P and the DJIA are indicated to open flat, while the tech-heavy Nasdaq is called to open 0.3% higher.
US durable goods orders data showed a 3.70% rise in September, from 0.10% in the previous month, coming in ahead of a 2.00% forecast, according to FXStreet.com. However, excluding the surge in orders for transportation equipment, durable goods orders edged down by 0.10% in September compared to a 0.4% drop in August. The drop in ex-transportation orders came as a surprise to economists, who had been expecting a 0.5% increase.
At the individual UK stock level, Serco Group, up 1.4% has jumped to be one of the FTSE 250's biggest risers. The company's chief executive fell on his sword, resigning due to the company's botched deal to run a prisoner transfer contract and as the company also moved to strengthen its government contract operations. The company is undertaking what it describes as a "renewal programme" after the UK government and Serco in August called in police to examine claims of fraudulent misreporting of data on the company's contract to transport prisoners to court in London and East Anglia. The government has threatened to block the company from winning any more government contracts unless it quickly changes and is more open to government scrutiny on any public contract.
Still to come in Friday's data calendar, October's Reuters/Michigan consumer sentiment index is expected at 1455 BST.
By James Kemp; [email protected]; @jamespkemp
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