27th Feb 2014 07:33
LONDON (Alliance News) - UK stocks are expected to open marginally lower Thursday, as the UK earnings calendar hits its peak and investors await some top-tier macro-economic data. Markets are also are showing caution ahead of the second installment of Fed Chair Janet Yellen's address to the US Congress.
While the FTSE 100 fell for the second consecutive session on Wednesday, US stocks managed to perform slightly better than those in Europe and closed close to flat. US investors appeared to take heart from better-than-expected new home sales on Thursday, which broke a string of weaker-than-expected readings that have been largely attributed to bad winter weather.
It has been a mixed session in Asia overnight, with the Nikkei down 0.3%, but the Hang Seng up 1.3% and the Shanghai Composite up 0.3%.
Spreadbetters are indicating that the FTSE 100 will open about 0.3% lower, at 6,795 points.
The European economy will be the early focus Thursday, with data already out showing German import prices fell by 1.1% year-on-year in January, slowing the decline of 2.3% seen in December and representing a smaller fall than economists expected.
German unemployment numbers due at 0855 GMT. Economists are expecting a reduction of 10,000 in February, slowing the improvement from the 28,000 drop seen in January. The headline rate is expected to remain stable for the third consecutive month February, at 6.8%.
Later in the day markets will get the latest update on price pressures in Europe's largest economy, with the release of preliminary German CPI data. Consumer prices in February are expected to have risen by 0.6% month-on-month, after having fallen by 0.6% in January.
The harmonised index, or HCPI, which is most closely watched by the European Central Bank for policy decision making is expected to record 1.1% growth year-on-year in February, slipping from 1.2% in January. Such a reading would be likely to re-ignite the debate over whether further monetary easing is needed in the Eurozone.
"Recent concerns about the risk of euro area deflation mean that Germany?s February inflation release will be closely watched," said Lloyds Bank economists in a morning note to clients.
From the US, monthly durable goods orders are due at 1330 GMT, followed by initial jobless claims at 1330 GMT. Janet Yellen will also be sitting to deliver the second part of her address to Congress, which was postponed on February 13 due to heavy snow.
"What we know already is that the Fed has decided to alter its forward guidance to allow it to maintain a dovish view on interest rates even when the unemployment rate drops below the 6.5% level. What we don?t know is whether the continued bad spate of economy data will encourage Yellen to further emphasise the Fed?s dovish position," said Rabobank senior currency strategist Jane Foley.
The most recent commentary from Fed officials suggests the Central Bank is set on its tapering course. "As things stand, given recent comments by other Fed officials, it would need the economic data to fall off a cliff between now and March 18th to prevent another taper of USD10bn," says CMC Markets chief market analyst Michael Hewson.
Ahead of the slew of data, major currency pairs are stable. Against the dollar, the pound currently trades at USD1.6670 and the euro trades at USD1.3680.
Gold continues to trade close to its recent highs, currently USD1,328.30 per ounce. Brent Oil trades towards the lower end of its range in recent sessions, currently USD109.27 per barrel.
The UK earnings season reaches its peak on Thursday. Financials groups RBS, RSA Insurance and Man Group all have released full-year results. Other big names with full-year numbers out include British American Tobacco, Reed Elsevier, Premier Oil and Kazakhmys, while house builders Redrow and Barratt Developments have announced interims.
By Jon Darby; [email protected]; @jondarby100
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