3rd Mar 2014 07:41
LONDON (Alliance News) - UK stocks are called to open sharply lower Monday as investors look to avoid risk, moving away from equity portfolios and towards traditional safe-havens such as gold, as international political tensions mount.
"The escalation of tensions at the weekend in the Ukraine will manifest itself in a much lower open in Europe as we start a new week and month, and with reports of troop mobilisation by Ukrainian forces, as well as reports that Polish forces are moving to reinforce its border with Ukraine, we can expect a fairly choppy session," says Michael Hewson, chief market analyst at CMC Markets.
Seven of the world's leading industrialized nations issued a joint condemnation of Russian actions on Sunday as it took the control of the Crimea region of Ukraine, and its Parliament voted to approve troop-deployment in Ukraine.
"We, the leaders of Canada, France, Germany, Italy, Japan, the UK and the US and the President of the European Council and President of the European Commission, join together today to condemn the Russian Federation's clear violation of the sovereignty and territorial integrity of Ukraine," the G7 statement, released by the White House late Sunday, said.
Adding to these fears, the South Korean Defence Ministry has reported that North Korea fired two short-range missiles with a presumed range of more than 500 kilometres from its east coast early Monday. The news comes just days after South Korea said that North Korea had fired four missiles with a 200-kilometre range off its east coast.
CMC Markets indicates the FTSE 100 to open down 63 points at 6,747, having closed at 6,809.7 on Friday. IG calls for an even lower open at approximately 6,734 points.
The price of gold, however, has benefited. Ahead of the London stock market open, the precious metal is trading at USD1,343.90 per ounce, up about 1.6%.
"The coming week is a busy one for scheduled data and it begins with a rush of data today," says David Page, senior UK macroeconomist at Lloyds Bank.
In data released Saturday, the latest survey from HSBC and Markit revealed that manufacturing activity in China in February fell to 48.5 in February, down from the 49.5 recorded in January, continuing to signal a contraction in the sector.
Capital Economics China Economist Julian Evans-Pritchard said that tight monetary conditions are likely to remain the primary drag on the manufacturing sector. Although interbank rates have fallen in recent weeks, Evans-Pritchard said he didn't believe that the People's Bank of China has shifted away from monetary tightening.
Conversely, China's non-manufacturing index climbed to a score of 55.0 in February, the China Federation of Logistics and Planning said, up from 53.4 in January.
The data has contributed to a mixed session in Asia Monday. Ahead of the UK equity market open, the Nikkei in Tokyo has closed down 1.3%, with the Hang Seng trading down 1.2%, and the Shanghai Composite index up 1%.
In the UK, property price website Hometrack said that the average asking price for a house in the UK was up 0.7% on a monthly basis in February, following a 0.3% increase in January. Year-on-year, house prices climbed 5.4%, accelerating from the 4.8% increase in the previous month.
Still to come in the data calendar Monday, Italian Markit manufacturing PMI data is scheduled for 0843 GMT, ahead of the French equivalent at 0848 GMT, the German reading at 0853 GMT, and the EU's at 0858 GMT. UK manufacturing PMI is released at 0928 GMT, just before UK consumer credit and mortgage approvals are published at 0930 GMT.
In the US, personal consumption and spending data are released at 1330 GMT, ahead of US Markit manufacturing PMI at 1358 GMT and the ISM reading at 1500 GMT. US construction spending information is also scheduled for 1500 GMT.
Also in the afternoon, European Central Bank President Mario Draghi gives a speech at 1400 GMT.
In corporate news, blue-chip Intertek Group and FTSE 250-listed Amlin, HellermannTyton, Senior, Keller Group and Ultra Electronics Holdings all have released full-year results.
By James Kemp; [email protected]; @jamespkemp
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