21st Jul 2014 06:42
LONDON (Alliance News) - UK stocks are set to open slightly higher Monday even as geopolitical issues look set to continue to dominate attention Monday, with investors returning from a weekend that saw further violence in Gaza and talk of increased sanctions from the UK and Europe against Russia in light of last week's airliner disaster in eastern Ukraine.
Ahead of the European opening bell Monday, futures indicate that the FTSE 100 will open 4 points higher at about 6,753.
International investigators are reportedly being denied full access to the plane crash site in Ukraine, which, given that US and European officials are convinced that the rebels are being controlled by Russia, appears likely to lead to a fresh round of sanctions, possibly as soon a this week.
"It now seems that we are moving towards a situation where sanctions from European countries on Russia are almost a certainty," said Alpari chief market analyst James Hughes.
Further adding to the geopolitical uncertainty, Sunday saw the deadliest day of the fighting between Israel and Hamas in the Gaza Strip, with more than 100 Palestinians and 13 Israeli soldiers killed in what Israeli Prime Minister Benjamin Netenyahu is now referring to as a war.
Given that the EU is Russia's biggest trading partner, the global issues send stocks in Europe tumbling late on Thursday, when news of the downing of the airliner was first reported, and kept investors on the sideline into the end of the week.
US stocks, however, managed to close higher yet again on Friday, as investors there managed to focus on second quarter corporate earnings which have in many cases so far beaten analyst expectations. The DJIA gained 0.7% on Friday, while the S&P 500 gained 1.0%.
"Given the sheer number of geopolitical factors at play this year, the resilience, or complacency, of US markets continues to surprise and amaze, in equal measure," said CMC Markets chief market analyst Michael Hewson.
It has been a disappointing session in Asia Monday, however, with Japan closed for Marine Day and the Hang Seng and Shanghai Composite both continuing lower by 0.2%.
In the UK Monday, Tesco has released an unscheduled update ahead of the open to say Chief Executive Philip Clarke will be stepping down in October, to be replaced by Dave Lewis, who is currently a non-executive director of British Sky Broadcasting. Tesco said that current trading conditions are tougher than it had anticipated.
Following last week's news of 21st Century Fox's takeover interest in Time Warner, BskyB is reportedly in line to buy Fox's Sky Italia unit and its 57% interest in Sky Deutschland AG as it sheds some assets to bolster its offer for Time Warner.
Scheduled interim results have also been released from Anglo Platinum, Dialight, and Microgen, while Babcock International Group has released an interim management statement.
The data calendar is light Monday, with the main data of domestic interest, the Rightmove house price index, already released. The average asking price for a house in the UK was down 0.8% on month in July to GBP270,159, the survey said. That follows the 0.1% increase in June, and it marks the first decline in seven months. On a yearly basis, house prices climbed 6.5%, slowing from the 7.7% increase in the previous month.
By Jon Darby; [email protected]; @jondarby100
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