14th Mar 2014 07:43
LONDON (Alliance News) - UK stocks are set to follow their Asian and US counterparts lower Friday, extending recent losses, as investors attempt to reduce exposure to risk assets, including equities, as the Ukraine crisis escalates ahead of Sunday's referendum in Crimea.
US and European stock markets fell sharply Thursday, with the FTSE 100, DJIA, S&P 500, NASDAQ Composite, CAC 40, and DAX 30 all closing down more than 1%.
The negative sentiment continued into the Asian session with the Nikkei in Tokyo closing down 3.3%, while the Hang Seng and Shanghai Composite index are down 0.9% and 0.7%, respectively, ahead of the UK equity market open.
Russia's Defence Ministry has announced new military operations in several regions near the Ukrainian border, even as the European Parliament backed tough new sanctions against Russia and expressed support for the new Ukrainian authorities.
Additionally, US Secretary of State John Kerry has warned that Russia will face immediate, "very serious series of steps" from Europe and the US if it fails to accept a diplomatic compromise.
On Sunday, up to 1.8 million people in Crimea are set to vote on whether the Black Sea peninsula should remain an autonomous republic within Ukraine, or if it should "reunite" with Russia.
"Concerns about China are also likely to continue to resonate," says Michael Hewson, chief market analyst at CMC Markets. "Particularly given Thursday's comments from Chinese Premier Li Keqiang that future defaults on bonds and other financial products were 'unavoidable', suggesting the potential for a domino of defaults, whose effects could ripple out across the globe, and in the process drive growth expectations for 2014 lower."
Both IG and CMC Markets indicate the FTSE 100 will open down at approximately 6,532 points, having closed at 6,553.78 on Thursday.
In data just released, Germany's consumer price inflation came in as expected in February. On a monthly basis, German CPI grew 0.5% in February, having dropped by 0.6% in January. Year-on-year, the consumer price index came in at 1.2%, slowing from 1.3% in January.
The euro was mixed in the aftermath of the release. Ahead of the UK equity market, the single currency trades at USD1.3857, JPY140.866, CHF1.2133, while the pound trades at EUR1.1982.
"Today?s domestic calendar will be dominated by the delayed release of the trade figures for January," says Jonathan Thomas, senior economist at Lloyds Bank. In December, the UK trade deficit fell by GBP2.07 billion to GBP7.72 billion, its lowest level since July 2012, but economists expect the deficit to rise to GBP8.70 billion in January.
The figures are scheduled to be released at 0930 GMT.
Construction output data for the euro area are released at the same time, ahead of eurozone fourth quarter employment change numbers at 1000 GMT.
"Given the weather-related uncertainty about underlying US activity in the first quarter, the March results from the University of Michigan consumer sentiment survey will be closely monitored," says Thomas. The Reuters/Michigan consumer sentiment index is released at 1355 GMT.
Ahead of this, the US producer price index is released by the Bureau of Labor Statistics at 1230 GMT.
In corporate news, mid-cap JD Wetherspoon has released interim results, with pretax profit up 3.2% and like-for-like sales up 5.2%.
By James Kemp; [email protected]; @jamespkemp
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