26th Feb 2014 07:29
LONDON (Alliance News) - UK stocks are set to follow their US counterparts marginally lower Wednesday, as investors take their positions ahead of the latest UK GDP estimate later in the day.
Wall Street closed slightly lower Tuesday after US consumer confidence fell by more than expected in February. The DJIA, S&P 500, and NASDAQ Composite all closed down by between 0.1% and 0.2%.
Similar sentiment is expected to be seen at the UK equity market open Wednesday. Both IG and CMC Markets indicate the FTSE 100 to open fractionally lower, at approximately 6,827 points, having closed down for the first time in eight days on Tuesday at 6,830.5.
"The UK economy is once again in focus this morning after yesterday?s upgrade from the EU commission of its 2014 growth forecasts to 2.5%, a 0.3% upward adjustment on November?s 2.2% estimate," says Michael Hewson, chief market analyst at CMC Markets.
The second preliminary reading of UK gross domestic product is scheduled for 0930 GMT. Quarter-on-quarter growth is expected to remain unchanged from the first preliminary reading, falling to 0.7% from the 0.8% recorded in the previous quarter. On a yearly basis, growth is expected to expand to 2.8%, up from 1.9%, as suggested in the initial preliminary reading.
"While initial estimates are often revised over time, in the last 20 years fewer than 20% have been revised at the second estimate stage," says Rhys Herbert, senior international macroeconomist at Lloyds Bank. Moreover, "revised data over the last month showed only small and offsetting changes to industrial production and construction growth, not enough to result in a revision," he adds.
Ahead of the release, Monetary Policy Committee member Ben Broadbent gives a speech. "His recent column in the Sunday Times suggests that he sees signs of improvement in the economy," says Herbert. However, "on policy, he is likely to merely repeat the party line that any interest rate rises will be 'gradual and limited'."
In data just released, the forward-looking German Gfk consumer confidence survey came in a 8.5 in March, up from the upwardly revised 8.3 seen in February, hitting its highest level since 2007. The reading also beat economists' expectation for 8.2.
The euro edged higher in the immediate aftermath of the release. Approaching the UK stock market open, the currency trades at USD1.3745, while the pound trades at EUR1.2136.
Also in the data calendar Wednesday, UK total business investment figures are released at 0930 GMT. In the afternoon, US new home sales numbers for January are released at 1500 GMT.
In corporate news, blue-chips Travis Perkins, Petrofac and ITV, and mid-caps Henderson Group, Direct Line Insurance Group, Taylor Wimpey, Segro and CSR, amongst others, have all released full-year results for 2013 ahead of the London equity market open.
Recruitment firm Hays has released interim results.
By James Kemp; [email protected]; @jamespkemp
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PetrofacHaysDirect LineWeir GroupTravis PerkinsSegroInter. Pers.Taylor WimpeyITV