23rd Oct 2014 06:29
LONDON (Alliance News) - UK stocks are set to open lower Thursday ahead of a fresh round of Markit PMI readings from across the eurozone that are expected to show further economic weakness in the single-currency block.
Embattled UK supermarket Tesco will be in focus at the open after confirming the black hole in its first half accounts is actually bigger than originally expected.
Futures indicate that the FTSE 100 will open 44 points lower at 6,355.
UK stock indices put in a reasonable performance on Wednesday, supported by a doveish set of minutes from the October Bank of England policy meeting and by US consumer price inflation data that were very slightly stronger than expected, as well as a number of stand-out stock movers given that the UK and US corporate earnings season is in full swing.
US markets had been a little higher at the time of the European close but went on to suffer losses, with the DJIA ending down 0.9%, the S&P 500 down 0.7%, and the Nasdaq Composite down 0.8%. It also has been a negative session in Asia, with the Nikkei 225 down 0.4%, the Hang Seng down 0.4%, and the Shanghai Composite down 0.7%
The HSBC China manufacturing PMI released overnight provided little comfort to investors, despite coming in fractionally higher than expected at 50.4 in October, up from 50.2 in September, and ahead of the expectation for a print of 50.3.
UK corporate releases have stepped up another gear Thursday, with the much anticipated interim results from embattled supermarket Tesco already on the wire. Tesco has confirmed that the black hole it found in its first half results is actually GBP263 million, more than the GBP250 million it originally warned of. Furthermore, investigators Deloitte have said that creative accounting methods have been applied in previous reporting periods as well. Chairman Richard Broadbent has announced that he will step down.
Full year numbers have also been released Thursday from Britvic, while third quarter numbers are scheduled from Ladbrokes, Hochschild Mining, Anglo American, Unilever, African Barrick Gold, and Premier Foods.
The economic focus of the morning will be the flash estimates of October manufacturing and service sector PMI's from across the eurozone. France is first up at 0800 BST, with both readings expected to decline further to 48.5 and 48.2, respectively, from 48.8 and 48.4 in September.
In Germany, there also is further weakness expected, with the manufacturing sector expected to slip further into contraction with a reading of 49.5, down from 49.9 in September. The German service sector remains stronger but also is expected to slip to 55.0 in October from 55.7 in September.
Recent disappointing data from the eurozone has led to calls and expectations from many parties for the European Central Bank to step in with further easing measures, namely full quantitative easing, which is seen by some as the only way back to growth for the region.
"These expectations are expected to be reinforced later this morning, regardless of their credibility, and denials from the ECB, when we get the latest manufacturing and services PMI readings for September from France and Germany, with further deteriorations in economic activity expected," says CMC Markets chief market analyst Michael Hewson.
UK retail sales also will be a keynote for UK investors, with the data due at 0930 BST. The expectation is for a slowdown in sales growth to 2.8% year-on-year in September from 3.9% in August.
Later in the afternoon, data from the US includes initial jobless claims, the Markit manufacturing PMI, and the latest house price index.
By Jon Darby; [email protected]; @jondarby100
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