LONDON (Alliance News) - UK stocks are set to make a stable open Tuesday, ahead of UK consumer price inflation data that will provide the market focus for the morning.
On Monday the UK's leading share index staged an afternoon turnaround, rallying back to a marginally positive close after having spent most of the day firmly in the red, on the back of stronger-than-expected results from UK bank Citigroup, and also boosted by the strongest growth in US retail sales for eighteen months, of 1.1% in March.
While the FTSE 100 managed to regain ground in the afternoon, the gains were mainly in defence and commodity stocks as concerns over the uncertain situation in Ukraine continue to weigh on sentiment. This was evidenced by the heavy falls suffered in the FTSE 250 index as well as the AIM market.
"While the rise in retail sales is undoubtedly welcome news it certainly doesn?t remove the concerns that investors have regarding the more over valued sectors, which have continued to come under pressure," said CMC Markets chief market analyst Michael Hewson.
With Ukraine still in focus, and ahead of UK inflation data, spreadbetters are indicating the FTSE 100 will open broadly flat Tuesday at 6,580 points.
In Ukraine, as pro-Russian protesters fuelled concerns about the country's possible break up by storming more government buildings in the east of the country, the pro-western leadership in Kiev on Monday offered a referendum on federalization and suggested deployment of UN peacekeepers. Having vowed Sunday to launch military action unless the separatists layed down their arms by Monday morning, interim President Oleksandr Turchynov signed a decree allowing law enforcement agencies to start an "anti-terror operation" in restive areas.
In the UK, like-for-like retail sales in the UK tumbled 1.7% on year in March, the British Retail Consortium said on Tuesday - falling into the red for the second straight month. The headline figure was well shy of forecasts for an increase of 1.0% following the 1.0% decline in February. Food sales were a key drag, shedding 2.7%. Although the index is known to be quite volatile, the disappointment compared to forecasts is unlikely to help sentiment Tuesday.
UK inflation is the major economic focus Tuesday morning, with the office of National Statistics releasing CPI and PPI numbers at 0830 GMT. Economist expect consumer prices to have risen by 1.6% year-on-year in March, slightly slower than the 1.7% price growth recorded in February. On a monthly basis prices are expected to be rising at 0.2%, slowing from 0.5% in February.
If the predictions are correct, it will mark the lowest level of annual inflation in the UK since October 2009. "Today?s outturn is likely to be influenced by weaker energy prices and the late Easter, which may have delayed some of the usual seasonal price increases in airfares and on the high street," said Lloyds Bank head of macroeconomics Adam Chester.
Also in the economic calendar Monday, the German and eurozone ZEW economic surveys, which are both expected to show a light moderation in economic sentiment in April when released at 0900 GMT, with the eurozone print expected at 60.7, down from 61.5, and the German print expected at 45.0, down from 46.6 in March.
In the afternoon, US CPI data is due at 1230 GMT, along with the NY Empire State manufacturing index. Federal Reserve Chair Janet Yellen is also speaking at a financial markets conference in Atlanta at 1245 GMT.
In UK company news, Debenhams has announced a 1.5% increase in first half like-for-like sales, while Sports Direct is reportedly poised to begin selling on credit via its website in a move emulating the model successfully used by Next. Fellow retailer JD Sports has announced preliminary results, while UK pub operator Punch Tavens has announced a slight fall in first half revenues.
Also Tuesday, Rio Tinto has put out a first quarter production report, along with Hochschild Mining, while temporary power supplier Aggreko has released an interim management statement.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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