10th Oct 2014 06:36
LONDON (Alliance News) - UK stocks are set to open significantly lower Friday amid a slew of market worries, including the weakness of the eurozone economy, a potential flare up in protests in Hong Kong, and the spread of the Ebola virus.
Futures indicate that the FTSE 100 will open as much as 70 points lower at 6,365.
The markets this week have been dominated by concerns over the state of the eurozone economy, with data showing the fastest falls in both German industrial production and exports since the start of the financial crisis, and the IMF warning that the whole region is at 40% risk of falling back into recession.
European Central Bank President Mario Draghi Thursday repeated his frustration with eurozone countries, including France and Italy, that have not implemented the painful reform measures he sees as necessary for the central banks policies to have a meaningful effect.
"Put simply, I cannot see any way out of the crisis unless we create more confidence in the future potential of our economies," Draghi said during a speech in Washington.
On top of economic concerns, the spread of Ebola to Spain and potentially other European countries has caused concern in the markets, hurting particularly the travel related stocks including the airlines and holiday operators.
The UK government Thursday said it will start to introduce checks for Ebola for incoming passengers at UK airports. The time taken to make the decision has been criticised by some, especially as there are concerns that the disease may have already spread to the UK amid reports that a British businessman has died from the disease in Macedonia.
Despite receiving a short-term boost from a doveish set of minutes from the September Federal Reserve meeting on Wednesday, US markets quickly gave up that strength and went on to suffer their worst one-day fall of the year Thursday. The DJIA ended down a relatively huge 335 points, or 2.0%. The S&P 500 lost 2.1%, and the Nazdaq Composite also lost 2.0%.
Asian markets have followed suit early Friday, with the Nikkei closing down 1.5%, the Hang Seng continuing down 1.9%, and the Shanghai Composite continuing down 0.6%.
Given comments from student leaders in Hong Kong on Thursday that their protests will enter a "second phase" now that the government has backed out of planned talks, the potential for a flare-up in the pro-democracy protests in the Chinese city is further weighing on global sentiment Friday.
With little in the way of economic data to shift sentiment Friday, European markets currently look set for another day of heavy losses, with the FTSE 100 looking likely to test its lowest levels of the year.
Falling commodity prices have been a further recent concern for investors, and US crude oil prices plummeted for a third straight session on Thursday as investors continued to worry over demand growth prospects and a supply glut. Brent oil reached a low of USD88.06 per barrel overnight, its lowest level since late 2010.
French and Italian industrial output data, as well as Portuguese consumer inflation data, are due for release throughout the morning and will provide some interest given the focus on the European economy.
From the UK, August trade balance data is due at 0930 BST. A small improvement is expected in the goods trade deficit to GBP9.6 billion from GBP10.19 billion in September.
FTSE 250-listed Jupiter Fund Management has said its assets under management have fallen to GBP31.7 billion in the three months to end-September from GBP33.11 billion previously. Meanwhile FTSE 250-listed Vedanta Resources has put out a production update Friday.
By Jon Darby; [email protected]; @jondarby100
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