14th Feb 2014 07:41
LONDON (Alliance News) - UK equities are set to open slightly lower Friday, as investors shrug off a positive close on Wall Street and look ahead to preliminary fourth quarter Gross Domestic Product estimates for the eurozone at 1000 GMT.
US equities closed slightly higher Thursday despite both US retail sales and jobs data missing economists' expectations.
"New York traders looked out of their windows, saw the snow coming down and concluded that despite a weak January retail sales number, all was right with the world and carried on buying stocks, on the basis that the data would quickly bounce back once the snow and ice had melted away," said Michael Hewson, chief market analyst at CMC Markets.
The DJIA closed up 0.4%, the NASDAQ Composite closed up 0.9%, and the S&P 500 closed up 0.6%.
Nevertheless, a more subdued open is expected in London Friday. Both CMC Markets and IG indicate the FTSE 100 to open slightly lower at approximately 6,649 points, having closed at 6,659.42 on Thursday.
"Friday's economic calendar will be dominated by the publication of the first estimates of euro area GDP," said David Page, senior UK Macroeconomist at Lloyds Bank.
After the European Central Bank left its key interest rate unchanged at a record low 0.25% last week, and ECB President Mario Draghi said he was waiting for further information before making any policy changes, the reading is likely to be the key focus of the day.
Growth in the bloc is forecast to register a slight increase in the fourth quarter, coming in at 0.2%, up from 0.1% in the third quarter.
"Any sort of miss on the headline numbers to the downside is likely to crank up the pressure on the ECB and Mr Draghi to try and enact further measures to help underpin the current weak and feeble recovery," says Hewson.
French and German growth estimates for the fourth quarter already have been released, providing a preview of the eurozone figures.
France's GDP expanded 0.3% sequentially in the fourth quarter, following a nil growth in the third quarter, and ahead of economists' expectations of a more modest expansion of 0.2%. Over the whole year of 2013, GDP rose 0.3% after a stagnation in 2012, the statistical office said.
Germany's fourth quarter GDP estimate also beat expectations. Its GDP rose by 0.4% in the final three months of 2013, up from 0.3% in the third quarter, and ahead of expectations of a 0.3% increase.
The euro jumped in the aftermath of the stronger-than-expected German data. Ahead of the UK stock market open, the currency trades at USD1.3697, GBP0.8221, and JPY139.508.
Next up, the Italian fourth quarter GDP estimate is released at 0900 GMT.
Also in the data calendar, EU trade data is released at 1000 GMT. In the US, import and export price data is released at 1330 GMT. Industrial production and capacity utilization information is scheduled for 1415 GMT, ahead of the Reuters/Michigan consumer sentiment index at 1455 GMT.
In corporate news, blue-chip Anglo American and FTSE 250-listed Riverstone Energy have released full-year results.
Anglo American recorded a pretax profit of USD1.70 billion in 2013, having posted a pretax loss of USD171 million in 2012. The major mining company also said that it forecasts the world economy to strengthen in 2014/2015, which it expects to help company finances.
Meanwhile, Severn Trent and Pennon Group have released interim management statements.
By James Kemp; [email protected]; @jamespkemp
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