25th Apr 2014 06:40
LONDON (Alliance News) - UK stocks are set to open slightly lower Friday, following a volatile session on Thursday, as concerns about the escalating crisis in Ukraine threaten to overshadow yet another batch of broadly positive US corporate earnings reports.
Stock markets in Europe and the US fell sharply from their intra-day highs Thursday after rumours that Russian President Vladimir Putin had called an emergency press conference sparked an immediate sell-off of risk assets, including equities, and buying of gold.
Although "this proved a somewhat false dawn, with the press conference failing to come to light and indices gradually returning to the levels seen prior to the rumour...this proved an invaluable exercise in demonstrating the risks within the markets to the ongoing Ukraine conflict," said Joshua Mahony, research analyst at Alpari.
Major UK equity indices - including the FTSE 100, FTSE 250, CAC 40 and DAX 30 - managed to end the day in positive territory, with the UK's blue-chip index closing at its highest level for over six weeks, but lingering concerns about the crisis are set to weigh on UK stocks at the open Friday.
Alpari expects the blue-chip index to open down at approximately 6,694 points, having closed at 6,703 on Thursday, while IG and CMC Markets forecast an even lower open - expecting the index to open down at 6,689 and 6,686, respectively.
The soft open is expected despite a largely positive close on Wall Street on Thursday, and the latest tranche of US corporate earnings reports, which were released after the US equity market close, coming in better than expected.
The S&P 500 closed up 0.2%, the NASDAQ Composite up 0.5%, and the DJIA almost perfectly flat.
Subsequently, Microsoft and Visa both released better-than-expected quarterly earnings reports, while Starbucks and Amazon came in as expected.
In Asia, ahead of the UK equity market open, stocks are mixed. The Hang Seng is down 1.2%, the Shanghai Composite index is down 0.3%, while the Nikkei in Tokyo is up 0.2%.
"In Japan, the ongoing focus upon inflation was brought bang up to date, with the latest release of the Tokyo CPI reading; commonly viewed as the leading indication of nationwide inflation," said Mahony.
Overall inflation for the Tokyo region 2.9% on year in April, the Ministry of Internal Affairs and Communications said on Friday. That was slightly below expectations for 3%, but up sharply from 1.3% in March - perhaps finally signalling an end to the deflation that has hampered the nation for more than 15 years, although the recently implemented consumption tax hike also is likely a factor.
In the data calendar, UK retail sales data for March released at 0830 GMT provides the early focus Friday.
"Headline volumes (ex-auto) for February surprised on the upside with a 1.8% month-on-month jump, and recent British Retail Consortium data for annual sales points to some retracement this month," said Jonathan Thomas, senior economist at Lloyds Bank. "This year?s late Easter is also likely to weigh on sales, although the magnitude of any adjustment made by National Statistics is difficult to judge," he adds.
Economists' expectations are for retail sales to decline 0.4% month-on-month in March, following a 1.7% increase in February, but to increase 3.8% year-on-year, up from a 3.7% rise posted in February. Excluding fuel, retail sales are expected to decline 0.5% month-on-month in March, but are expected to increase 4.3% on a yearly basis, up from the 4.2% recorded in February.
British Bankers' Association's data on mortgage approvals are released at the same time.
In the US, the preliminary reading of the Markit services purchasing managers index is published at 1345 GMT, ahead of the Reuters/Michigan consumer sentiment index at 1355 GMT.
In corporate news, FTSE 100-listed William Hill and WPP have been joined by FTSE 250-listed Spectris and Rotork in releasing trading updates.
By James Kemp; [email protected]; @jamespkemp
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