16th May 2014 11:17
LONDON (Alliance News) - US equity markets look set to open marginally lower Friday as investors pause for breath following the rotation away from equities and into bonds that dominated the markets on Thursday.
While there has been little to change overall sentiment, the equity sell-off will be stemmed somewhat by the results of US clothing retailer JC Penney, which reported sales growth for the first time since 2011 after the closing bell Thursday.
Expectations for JC Penney's results had been depressed by the disappointing numbers from the world's largest retailer, Wal-Mart, which were credited with turning sentiment negative on Thursday. However, although JC Penney's losses widened slightly, Wall Street appears impressed by revenue growth that beat expectations, and traders have sent the stock more than 17% higher in pre-market trading.
Equity indices as a whole are expected to retain a bearish mode, with the futures markets currently indicating that the DJIA, the S&P 500, and the Nasdaq Composite will all open about 0.2% lower.
"US stock markets look set to open lower today as investors lose faith in the global recovery with weak first quarter growth in the US and Europe," said CMC Markets market analyst Jasper Lawler.
As investors prepare themselves for possible monetary easing by the European Central Bank next month, interest in fixed-rate bonds has been rising, while equities have been falling.
"There is an increasing appetite for bonds again, with the ECB's apparent willingness to ease monetary policy, giving investors an incentive to buy bonds again, which is something they haven?t had since the Fed began tapering," said market analyst at Alpari Craig Erlam.
With little else in the data calendar, the Reuters/Michigan consumer sentiment index will receive full investor attention Friday when it is released at 1355 GMT. Economists expect the index to rise to 84.5 in May from 84.1 in April. "The consumer is extremely important for the US economy, so any indication that confidence is on the rise as we head into the summer is likely to be cheered by traders," said Erlam.
UK stocks continue to trade in the red ahead of the US open. The FTSE 100 is down 0.3% at 6,820.75, the FTSE 250 remains under heavier selling pressure, down 1.8% at 15,343.06, while the AIM All-Share is trading at a near six-month low, down 0.8% at 795.30.
Stocks in Europe also continue lower, with the German DAX 30 down 0.7%, and the French CAC 40 down 0.5%.
By Jon Darby; [email protected]; @jondarby100
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