15th Aug 2014 06:51
LONDON (Alliance News) - UK markets are expected to open higher on Friday, as investors start to price in action by the European Central Bank following Thursday's disappointing data from the eurozone and following the lead of strong trading sessions on Wall Street and Asia overnight.
Futures indicate the FTSE 100 will open 13 points higher at 6698.3 points.
The DJIA closed up 0.4% Thursday, while the Hang Seng Index in Hong Kong currently is up 0.6%.
Thursday's economic news was dominated by poor GDP results from Germany and the eurozone. Quarter-on-quarter figures from Germany showed the economy contracted by 0.2% while quarter-on-quarter results on the eurozone came in flat. Furthermore, European CPI slowed from 0.5% in June to 0.4% in July.
UK and Europe equities markets made modest gains Thursday despite the results, with some analysts suggesting this was driven by the expectation of quantitative easing from the Europe.
"With these calls for full-blown QE getting louder and louder it would appear that markets are betting that Germany and the Bundesbank will ultimately bend to the will of the crowd, hence yesterday?s drift higher." says Michael Hewson, chief market analyst at CMC Markets UK.
In corporate news, Carillion and Balfour Beatty helped boost the London market, as the two companies remained at odds over a proposed merger which Carillion currently wants more than does Balfour Beatty. On Friday morning, Balfour Beatty reaffirmed that it will reject Carillion's offer, deeming the bid "opportunistic". It also says it still plans to sell US arm Parsons Brinckerhoff. The news was followed by a cut in Balfour Beatty's share price target by JP Morgan to 220 pence from 230 pence.
The corporate calendar is very quiet on Friday, as there were no scheduled company updates, and France and Italy are closed for Assumption Day.
The highlight of the economic calendar Friday is the second estimate of second quarter UK GDP at 0930 BST. The consensus is that it will remain unchanged with growth of 3.1% year-on-year and 0.8% quarter-on-quarter.
Also on Friday is the release at 1330 BST of the US producer price index, which measures the average changes in prices in primary markets of the US by producers of commodities in all states of processing. The expectation for this result is growth of 1.8% year-on-year.
By Neil Thakrar; [email protected]
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