10th Mar 2014 07:43
LONDON (Alliance News) - UK stocks are set to open slightly lower Monday, taking cue from Asian counterparts.
Over the weekend, data from China revealed that exports from the world's second largest economy declined unexpectedly in February.
Exports declined by 18% in February, reversing the 11% increase in the previous month and confounding economist expectations of a 6.8% rise. Although imports grew 10.1%, when growth was expected to slow to 8.0% from 10% in January, China's trade balance swung to a deficit of USD22.98 billion compared to a surplus of USD31.86 billion seen in in the previous month.
Further weighing on Asian bourses, Japan's gross domestic product expanded by just 0.2% quarter-on-quarter in the fourth quarter of 2013, down from last month's preliminary reading for 0.3%, but in line with economists' expectations. On an annualized basis, GDP expanded 0.7%, shy of forecasts for 0.9% and down from 1.0% in the preliminary report.
Asian stocks are trading in the red Monday. Ahead of the UK stock market open, the Hang Seng is down 1.8% and the Shanghai Composite Index is down 2.8%. Earlier, the Nikkei in Tokyo closed down 1%.
This negative sentiment is expected to be seen at the UK equity market open. The FTSE 100 is called to open lower at approximately 6,686 points by IG, having closed at 6,712.67 on Friday.
However, "with Russia's military presence looming large, and the country at risk of civil war, the economic and financial market implications of the tensions in the Ukraine remain centre stage," says Nikesh Sawjani, UK macroeconomist at Lloyds Bank.
"Although there have been bouts of volatility, so far markets have taken recent events in their stride. The presumption, it seems, is that some form of compromise will be reached. The situation, however, remains on a knife-edge," he adds.
In positive news for the UK economy, the British Chamber of Commerce now expects the British economy to exceed its pre-recession peak in the second quarter, and to grow at a faster pace this year than previously estimated. The BCC expects the economy to expand 2.8% this year, which is faster than the 2.7% growth it had predicted in December. The outlook for 2015 has been revised up to 2.5% from 2.4%.
In a light data calendar Monday, Italian industrial output numbers are released at 0900 GMT, ahead of the eurozone Sentix investor confidence index at 0930 GMT. In the US, Charles Plosser, president of the Federal Reserve Bank of Philadelphia, gives a speech at 1115 GMT.
In a similarly light corporate calendar, AIM All-Share-listed Goals Soccer Centres has released full-year results for 2013. Banana firm Fyffes has announced a USD1.07 billion merger with its US rival Chiquita Brands
Meanwhile, FTSE 100-constituent WM Morrison Supermarkets is expected to announce with its results this week price cuts and GBP500 million of property sales to combat discount rivals like Aldi and ease shareholder worries, according to the The Sunday Times.
By James Kemp; [email protected]; @jamespkemp
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