4th Jun 2014 06:33
LONDON (Alliance News) - UK stocks are set to open broadly flat Wednesday following a disappointing session for US equities on Tuesday as well as for Asian markets overnight, and ahead of the Queen's Speech and UK service sector PMI data later in the morning.
US markets broke their recent winning streak on Tuesday. The S&P 500 had recorded a fresh record intra-day high for the previous eight consecutive trading sessions, but failed to do the same on Tuesday and closed fractionally lower. The DJIA also lost 0.1%, as markets around the world began to exercise caution ahead of Thursday's much anticipated European Central Bank meeting, at which some form of monetary policy easing is expected.
In Asia, the Nikkei closed fractionally higher, while the Hang Seng dropped 0.6% and the Shanghai Composite is almost 1.0% lower.
After closing down 0.4% at 6,836.30 on Tuesday, spread betters are indicating that the UK's leading index will open broadly flat Wednesday.
Data from research group Kantar on Tuesday showed growth in the UK grocery market at an 11-year low, sending the supermarkets lower. The "big four" will be in focus again Wednesday with Tesco having already released its first-quarter interim management statement. Tesco said its UK sales continued to slump over the period, with like-for-like sales including VAT and excluding petrol down 3.7%.
Also reporting Wednesday, Synergy Health has published its full-year results, along with RPC Group, Workspace Group, and Advanced Computer Software Group.
The Queen's Speech, in which the UK government sets out the legislation it intends to introduce in the coming parliamentary session, the last before next year's general election, will be delivered at about 1140 BST Wednesday.
The shares of UK pension providers took a kicking in March when Chancellor George Osborne announced a shake-up of the annuities market. A key piece of legislation likely to be announced Wednesday is the introduction of "Dutch-style" collective pension schemes, which would involve lower fees for the pension providers.
"Insurers have largely priced in the changes but any surprises in the Dutch-style system to be revealed could see shares dropping again," says CMC Markets market analyst Jasper Lawler.
In the European data calendar Wednesday, following Monday's round of Markit manufacturing PMI's, that were broadly revised lower, hurting equity indices, the service sector numbers will provide the early focus Wednesday.
Much like in the manufacturing sector, investors will be watching to find out whether the French service sector slipped into contraction in May, as the flash reading suggested two weeks ago. The German flash estimate, meanwhile, indicated strong growth two weeks ago, rising to 56.4 and supporting modest expansion in the eurozone wide number to 53.5. The French print is at 0850 BST, followed by the German print at 0855 BST, and the eurozone print at 0900 BST.
The UK Markit services PMI is due at 0930 BST, with economists expecting a rise to 58.2 in May from the 58.7 recorded in April.
"This morning, the UK services PMI is likely to dominate, with markets hoping we don't see a trilogy of disappointing figures following poor manufacturing and construction numbers so far this week," says Alpari market analyst Joshua Mahony.
With Thursday's ECB meeting remaining the main event of the week, the first revision of eurozone first quarter GDP will also be in focus Wednesday. Due at 1000 BST, economists are expecting an unchanged growth estimate of 0.9% year-on-year, with the quarterly figure also expected to be unchanged at 0.2%.
From the US Wednesday, the ADP employment change report will be a warm up for the monthly non-farm payroll employment report on Friday. Released at 1315 GMT, economists expect the ADP report to show an extra 210,000 people in employment in in May.
Both the Markit and ISM non-manufacturing PMI's are due at 1445 BST and 1500 BST respectively, with both expected to show a small improvement in May.
By Jon Darby; [email protected]; @jondarby100
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