27th Nov 2013 07:33
LONDON (Alliance News) - UK equities are indicated to open flat to slightly higher Wednesday as investors await an array of economic data releases from both the UK and the US.
In a busy data day Wednesday, UK economic growth is set to provide the morning focus, with the Office for National Statistics releasing its second estimate of third-quarter GDP at 0930 GMT.
The reading, called to come in at 0.8% quarter-on-quarter, should not provide any surprises, says CitiFX Wire's Lee Oliver.
"Of particular interest will be the proportion of the quarter?s growth that is driven by exports, as well as private consumption," says Michael Hewson, chief market analyst at CMC Markets. "More importantly for the recovery to be sustainable into subsequent quarters is that government spending needs to stay low, while the amount of business investment needs to improve from the previous number."
Alongside this, US data releases, ahead of Thursday's Thanksgiving holiday, will act as potential market drivers Wednesday.
US weekly jobless claims released at 1330 GMT are set to show a slight rise to 330,000 from 323,000.
The Chicago purchasing managers index for November, released at 1445 GMT is expected to come in at 60, a slight fall from October's 65.9. "A good or bad number is unlikely to be enough in itself to steer expectations surrounding a possible December taper, but that won't stop the market from trying to second guess next months Fed meeting," says CMC's Hewson.
The tapering of the Federal Reserve's USD85 billion-a-month quantitative easing programme is deemed to be a negative for traditionally risky equities because the flow of cheap money has been lifting the economy and companies.
CMC Markets calls the FTSE 100 to open unchanged at 6,626 points, while IG indicates the UK's headline index to open marginally higher at approximately 6,640 points.
In Europe, German Chancellor Angela Merkel's conservative-led bloc and the centre-left Social Democratic Party approved a coalition deal early Wednesday. A committee of more than 70 members endorsed the agreement hammered out earlier by negotiators during a 17-hour session.
The deal is subject to a vote by the SPD's 475,000 members, with the result due on December 14. Merkel could be reconfirmed in office as chancellor three days later.
In the corporate calendar Wednesday, blue-chip Compass Group has been joined by FTSE 250-listed Shaftesbury in releasing preliminary full-year results for 2013. Interim results from Royal Mail, the first indication of the company's performance since its floatation, have revealed a large increase in adjusted pretax profit, rising to GBP233 million from GBP94 million, while revenues grew to GBP4.5billion from GBP4.4 billion. Large-cap United Utilities also has released interim results.
By James Kemp; [email protected]; @jamespkemp
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