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LONDON (Alliance News) - UK stocks are set to continue to decline Tuesday, following their Asian and US counterparts lower, as investors continue to digest much weaker-than-expected US manufacturing data and as concerns about the US debt ceiling reappear.
Meanwhile, in a raft of 2013 earnings reports already released, BG Group announced a drop in full-year profit after it swung to a loss in its fourth quarter. ARM Holdings, on the other hand, revealed an increase in both full-year and fourth quarter pretax profit, increasing its dividend by 27%.
Global stocks plummeted Monday as the US ISM manufacturing report for January came in materially below economists' expectations.
The Institute for Supply Management revealed that the pace of growth in the US manufacturing sector slowed much more-than-expected, with the PMI falling to 51.3 in January, from 57.0 in December, and much worse than the slight drop to 56.0 that had been expected.
This saw the UK's FTSE 100 and FTSE 250 close down 0.7% Monday, with Wall Street also closing lower overnight. The DJIA, S&P 500, and Nasdaq Composite all closed down more than 2%.
Meanwhile, ahead of the London equity market open, Asian stocks trade firmly in the red. The Nikkei is down 4.2%, the Hang Seng is down 2.7%, and the Shanghai Composite is down 0.8%.
"Throw in some concern about the impending deadline for the raising of the debt ceiling in light of US Treasury Secretary Jack Lew?s comments Monday and uncertainty appears to be the prevailing sentiment of the moment," adds Michael Hewson, chief market analyst at CMC Markets.
Lew said the US federal government could default on its debt by the end of February if the debt ceiling is not raised.
Indeed, both IG and CMC Markets indicate the FTSE 100 to open lower at approximately, 6,424 points, significantly down from 6,465.66 at the close Monday.
In the forex market, the pound continues to take a battering after UK Markit manufacturing PMI data released on Monday missed expectations. Prior to the UK stock market open, sterling trades at USD1.6278, EUR1.2025, CHF1.4666, JPY164.377.
Furthermore, in the only piece of UK macro-economic data scheduled to be released Tuesday, UK construction PMI data is not expected to offer the currency any relief. Economists forecast that January's reading will reveal a drop to 61.5, from December's 62.1.
Outside of the UK, Italian consumer price index information and EU producer price index numbers are released at 1000 GMT. In the US, the Redbook index is released at 1355 GMT, with the ISM New York index scheduled at 1445 GMT, and factory orders data at 1500 GMT.
In the corporate calendar, BG Group reported that it swung to a loss in the fourth quarter. The company said that it recorded a loss of USD1.58 billion in the period, down from a profit of USD1.55 billion in the same period in 2012. Its full-year pretax profit came in at USD3.89 billion, down from USD6.35 billion.
ARM Holdings, however, reported that its fourth quarter pretax profit rose to GBP95.5 million, from GBP80.0 million in the same period of 2012, while its full-year pretax profit was up at GBP364.0 million, rising from GBP276.5 million in the previous year. The company also announced that its dividend had been increased by 27% to 5.7 pence.
FTSE 250-constituents Ocado Group and St. Modwen Properties also have released full-year results.
Elsewhere, blue-chip BP has released fourth quarter results, while FTSE 250-listed Victrex and TalkTalk Telecom Group have released interim management statements.
By James Kemp; jameskemp@alliancenews.com; @jamespkemp
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