21st Jul 2014 11:40
LONDON (Alliance News) - US stocks are set to open a little lower Monday as investors remain cautious amid the developing story of the airliner disaster in Ukraine and potential economic sanctions against Russia that could come as a consequence of it.
The additional headlines from what is fast becoming an all-out war in the middle east between Israel and Hamas, from which the death-toll has now topped 500, has led to a "risk-off" sentiment for global equity market Monday.
While last week's Wall Street performance showed that strong US corporate earnings have the power to trump geopolitical issues, as they stand, futures trading currently indicates that the DJIA and the S&P 500 will both open about 0.2% lower, while the Nasdaq Composite, supported to some extent by the expectation of strong technology earnings this week, is expected to open just 0.1% lower.
"Western leaders are pointing the blame at Russia for Thursday’s dreadful plane crash so the likelihood of stronger sanctions as well as the increasing death toll in Gaza has sent European markets sharply lower with US markets looking set to follow suit," said CMC Markets market analyst Jasper Lawler.
A fresh round of sanctions could come as early as Tuesday, when EU leaders are scheduled to meet to discuss the issue. UK Prime Minister David Cameron is due to deliver a statement to parliament Monday afternoon, after having spoken to Russian President Vladimir Putin, and is likely to push MP's and EU leader for tougher sanctions.
Heading towards the US open, stocks in the UK are off earlier lows but mainly continue in the red, with the FTSE 100 down 0.3% at 6,727.00, the FTSE 250 down 0.6% at 15,467.00, and the AIM All-Share now fractionally higher at 769.00.
In Europe, the threat of further sanctions is taking a greater tool, with the German DAX down 0.9%, and the French CAC 40 down 0.5%.
A surprise update from Tesco continues to drive the main movers in the FTSE 100. Tesco is leading the gainers, up 2.0%, while Morrisons leads the fallers, down 2.2%, after Tesco said that market conditions remain challenging and that first-half profit will be lower than expected. While the wider sector is suffering, Tesco has seen something of a vote of confidence from its shareholders over the decision to bring in a new CEO, Dave Lewis, who will join from Unilever, replacing current head Philip Clarke.
There's very little in the data calendar Monday, leaving the main afternoon focus on US corporate earnings. The Chicago Fed national activity index is the only release of note, at 1330 BST.
Amongst the US names reporting Monday, Netflix, the online streaming company is due to release second-quarter numbers after the US closing bell, with analyst looking for an earnings per share of USD1.16, up from USD0.86 last year, on revenue of USD1.33 billion. Netflix shares are moving higher in the pre-market, currently up 0.6%.
"Expectations are high for Netflix to post record second-quarter figures as the company looks to have turned a corner," said IG market analyst Alastair McCaig.
It's a big week for the US technology names, with Microsoft, Facebook, and Apple all due to report later in the week.
Amid ongoing merger and acquisition activity in the Pharmaceutical sector, Allergan, which is currently the takeover target of Valeant Pharmaceuticals, is due to report earnings Monday, with analysts expecting USD1.44 per share on revenue of USD1.77.
By Jon Darby; [email protected]; @jondarby100
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