27th Jun 2014 06:43
LONDON (Alliance News) - UK stocks are set to open flat to slightly higher Friday, following a late rally on Wall Street on Thursday and ahead of the third and final reading of UK first quarter gross domestic product at 0930 BST.
After coming under pressure in early trading, US stocks staged a significant recovery over the course of the trading session on Thursday to end the day slightly lower, but well above their intra-day lows. The early weakness on Wall Street was partly due to downbeat economic data and hawkish remarks from a top Federal Reserve official.
St. Louis Federal Reserve President James Bullard said that US Inflation looks likely to rise back to 2% later this year, allowing the Fed to hike interest rates by the end of the first quarter 2015.
However, the concerns about an earlier-than-expected interest rate rise waned over the course of the session, and the NASDAQ Composite, DJIA, and S&P 500 closed just fractionally in the red.
"The gradual pullback from the lows suggest that markets may be dismissing Bullard's comments given his non-voting status, but they seemed to have missed the point that he will be a voting member next year, so his views are important in that sense, in the timing of any rate rise," says Michael Hewson, chief market analyst at CMC Markets.
In the UK, the FTSE 100 is called to open flat to marginally higher Friday, having closed at 6,735.12 on Thursday. IG and CMC Markets call the blue-chip index to open unchanged, while Alpari expects it to open approximately 9 points higher at around 6,744.
"That being said, there has been a trend of inconsistent futures trading which has seen gains and losses reversed when it comes to the open given the unpredictable degree to which the markets are pricing in the conflict in Iraq," says Joshua Mahony, a research analyst at Alpari.
In data already released, a survey by Hometrack has revealed that house price growth in the UK continued to slow in June. House prices rose 0.3% on month in June, a slower rate of increase than the 0.5% rise in May, marking the slowest rate of growth since January. Housing demand remained unchanged after rising in the last 18 months, while the number of property listing rose 1.9% in June.
Meanwhile, GfK said that UK's consumer confidence index rose to 1 in June from 0 in May. This was below the consensus estimate for an index of 2, but still marked the highest level since March 2005.
However, "the final estimate of first quarter UK GDP will provide the highlight of today?s domestic news flow," says Jonathan Thomas, senior economist at Lloyds Bank.
Both of the preliminary readings indicated growth of 0.8% quarter-on-quarter, and the third and final reading is expected to confirm this Friday. However, Thomas notes that the upward revision of first quarter output to 1.5% from 0.6% could push the print to 0.9%.
Also released at 0930 BST, the UK's current account deficit is expected to narrow to GBP17.5 billion in the first quarter from GBP22.4 billion in the previous quarter.
Elsewhere, eurozone consumer confidence, business climate, industrial confidence, and services sentiment data are scheduled to be released at 1000 BST, with preliminary reading of German consumer price inflation due at 1300 BST.
In the US, the Reuters/Michigan consumer sentiment index is released at 1455 BST.
In corporate news, FTSE 250-listed Keller Group and Berendsen have released trading updates ahead of the UK equity market open Friday.
Imagination Technologies Group will be in focus at the open Friday after Credit Suisse, Jefferies International, and JP Morgan confirmed that they have placed 25 million Imagination Tech shares on behalf of Intel Capital Corp, the investment arm of chip giant Intel Corp. The placing, which represents approximately 9.3% of the issued share capital of the company, was priced at 205 pence per share, compared the closing price Thursday of 224.80p, and equates to gross proceeds of GBP51.25 million for Intel Corp.
Following completion of the placing, Intel Capital will be subject to a 90-day lock-up in respect of its remaining shareholding in the company.
By James Kemp; [email protected]; @jamespkemp
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Imagination Technologies GroupBerendsenKeller