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LONDON (Alliance News) - UK stocks are set to open flat to slightly lower Wednesday, following strong gains posted in the large- and mid-cap indices on Tuesday, as investors await a raft of data from the UK, eurozone and US.
Europe's major equity indices advanced strongly Tuesday, buoyed by a raft of merger and acquisitions activity and speculation within the pharmaceuticals sector.
Similar sentiment was seen on Wall Street overnight.
After AstraZeneca and GlaxoSmithKline led the way higher in London on Tuesday, Allergan did the same in the US, having confirmed that it has received an unsolicited takeover proposal from Canada's Valeant Pharmaceuticals. The NYSE Arca Pharmaceutical Index rose by 1.5% to its best closing level in well over a month.
Overall, both the DJIA and S&P 500 closed up 0.4%, and the NASDAQ Composite closed up 1%.
Nevertheless, "coming off the back of another positive finish for US markets last night, today?s European open looks set to be a fairly flat one, primarily due to caution ahead of some important French and German April economic data due out later this morning, and an uninspiring Chinese PMI number," says Michael Hewson, chief market analyst at CMC Markets.
The FTSE 100 is called to open almost perfectly flat at 6,682 points by CMC Markets, having closed at 6,681.76 on Tuesday, while IG and Alpari indicate it will open fractionally lower at approximately 6,680 points and 6,677, respectively.
However, later in the session, "we have a day full of important economic data which could swing markets either way," says Spreadex's Sam Fox.
In Asia, ahead of the UK equity market open, The Hang Seng is down 0.9%, the Shanghai Composite index is down 0.2%, while the Nikkei in Tokyo is up 1%.
In data already released, the latest survey from HSBC and Markit Economics revealed that the Chinese purchasing managers index rose to 48.3 in April. This was up from the 48.0 posted in March, but fractionally short of the 48.4 that had been expected by economists, and below the boom-or-bust score of 50 that separates expansion in a sector from contraction.
"The European session is likely to be dominated by the release of both manufacturing and services PMI figures from some of the major eurozone economies, followed closely by the Bank of England minutes and votes from the meeting earlier this month," says Joshua Mahony, research analyst at Alpari.
French preliminary Markit manufacturing and services PMI data for April are released at 0700 GMT. Economists' expectations are for a slight decline from the rebound recorded in March, with the manufacturing reading forecast to come in at 51.9, from the 52.1 posted in previous month, and the services figure expected to drop to 51.4, from 51.5.
The German manufacturing PMI number, which is released at 0728 GMT, is expected to increase fractionally to 54.0, up from the 53.7 recorded in March, while the services number, released at 0730 GMT, is expected to rise slightly to 53.4 from 53.
Preliminary manufacturing and services PMI data for the wider euro area are released at 0800 GMT.
The minutes from the latest Bank of England Monetary Policy Committee meeting are released at 0830 GMT. However, "there are unlikely to be any fireworks here, given that the last meeting happened well before last week?s unemployment numbers showed a fall below the now-discarded guidance threshold of 7%, to come in at 6.9%," says Hewson. UK public sector net borrowing information for March is released at the same time, with economists expecting a deficit of GBP9.1 billion, compared to the GBP7.49 billion posted in February.
In the US, the Mortgage Bankers Association released its MBA mortgage applications data at 1100 GMT, ahead of the preliminary Markit manufacturing PMI for April at 1345 GMT. Home sales data are published at 1400 GMT.
In corporate news, FTSE 100-constituent ARM Holdings has released full-year and first-quarter results, while FTSE 250-listed Fenner has released half-year results. Meanwhile, large-caps Sports Direct International, Reed Elsevier, and Hammerson have been joined by mid-caps AMEC, MoneySuperMarket.com Group and Spirent Communications in releasing trading updates.
By James Kemp; jameskemp@alliancenews.com; @jamespkemp
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