24th Apr 2014 06:33
LONDON (Alliance News) - UK stocks are set to open higher Thursday following a jump in US futures overnight, driven by the stronger-than-expected earnings of US technology bellwethers Apple and Facebook.
Technology stocks have been under the microscope recently amid concern that their high valuations are not supported by earnings. This has led to a sell-off in the sector and lowered expectations for first quarter earnings. However, two of the most important companies in the sector both significantly beat expectations after the close Wednesday, sending futures higher.
Facebook posted a 72% rise in first-quarter revenue to USD2.5 billion on the back of increased mobile advertising, while Apple said its profits rose 7% from last year as smargins improved amid strong sales of its iPhones. The stocks are up by 3.5% and 7.5%, respectively, in the US pre-market.
Apple also announced a 7 for 1 stock split, aiming to broaden the appeal of its pricey shares to investors.
After closing at 6,674.74 on Wednesday, the FTSE 100 is predicted by spreadbetters to open 17 points higher, at 6,691.
"As a result of this post US pop, we can expect to see a positive open for European markets this morning despite yesterday?s negative finish, though we could find that it will take more than a couple of good tech reports to hang onto those gains," said CMC Markets chief market analyst Michael Hewson.
Ongoing tensions in Ukraine will remain part of investors' thinking after Russian Foreign Minister Sergei Lavrov warned Wednesday that Moscow would retaliate strongly if its "interests" in Ukraine are attacked. The heightened rhetoric comes after the IMF offered Ukraine a USD17 billion support loan. While investors will have an eye on the situation, the markets are remaining relatively unfazed as long as clashes are contained to the east of the country.
Following Wednesday's strong European PMI readings, the morning economic focus is on the German IFO business climate survey at 0800 GMT, with economists expecting a slight drop in the reading to 110.5 in April from 110.7 in March.
"Given the uncertainty in Ukraine and the slowdown in China it would not be a surprise to see German business become a little more cautious." said CMC's Hewson.
European Central Bank President Mario Draghi is speaking from a conference in Amsterdam at 1000 GMT. His comments will be monitored closely for clues to the ECB's current thinking on whether or not to further ease monetary policy.
US durable goods orders are released at 1230 GMT, economists expect orders growth to have remained strong at 2.0% in March, marginally lower than the 2.2% recorded in February. "A sharp jump in orders for Boeing planes in March is expected to have underpinned a further strong rise in headline durable goods orders," said Lloyds Bank macroeconomist Nikesh Sawjani.
Weekly initial jobless claims numbers are also due at 1230 GMT, followed by the Kansas Fed manufacturing activity index at 1500 GMT. There's no top-tier data from the UK in Thursday's economic calendar.
AztraZeneca is back in the spotlight after being the focus of Tuesday's merger talk, as the pharmaceutical company has released as first-quarter earnings report that shows a drop in profit, while full year guidance has been maintained. First quarter numbers also are out already from consumer goods company Unilever Plc, along with mining groups African Barrick Gold and Anglo American.
By Jon Darby; [email protected]; @jondarby100
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
AstrazenecaAnglo AmericanUnilever