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LONDON (Alliance News) - Shares are set to open lower in London Tuesday as investors turn their focus to UK and US consumer price index readings, hoping for hints of when the central banks in the two countries will start to raise interest rates.
"The inflation number is the key one today as we now have the situation where any good numbers will point to a potential hike, and anything weaker will point to a dovish stance. The problem is the moves will be hugely exaggerated," says James Hughes, chief market analyst at eToro.
"The markets are incredibly nervous about the US dollar and the strength in equity markets, and the moves in both look like they could very easily start to unwind at the smallest bit of market data," Hughes adds.
UK consumer price index, which is due at 0930 GMT, is expected to show growth of 0.3% month-on-month in February, from a 0.9% decline in January. Year-on-year, the index is expected to grow by 0.1%, slowing from a 0.3% increase in January.
US CPI meanwhile, is expected to continue its decline, with economists forecasting a 0.1% fall year-on-year in February, the same as in January. The monthly reading, however, is expected to show a 0.2% growth, up from a 0.7% decline in January. The data will be released at 1230 GMT.
IG futures indicate the FTSE 100 to open 22.2 points lower at 7,015.5. The index closed up 0.2% at 7,037.67 on Monday, a new record high.
Wall Street closed lower on Monday. The DJIA ended down 0.1%, the S&P 500 closed down 0.2% and the Nasdaq Composite was off 0.3%.
In Asia Tuesday, the Japanese Nikkei closed down 0.2%. The Hang Seng trades down 0.3% and the Shanghai Composite is up 0.1%, on track for its tenth successive session of gains, despite China's manufacturing purchasing managers' index unexpectedly showing contraction in the sector.
The manufacturing sector in China moved into contraction territory in March, the latest survey from HSBC Bank showed, with a purchasing managers' index score of 49.2. The reading was well shy of forecasts for 50.5, and it was down sharply from 50.7 in February. Now at an 11-month low, the index also dipped below the boom-or-bust line of 50 that separates expansion from contraction.
Land Securities Group said it has exchange contracts for the sale of its 95% stake in Times Square in the City of London for GBP268.4 million.
The FTSE 100-listed property company is selling the 380,000 square foot office building to real estate funds managed by US private equity group The Blackstone Group LP.
Also in the UK corporate calendar Tuesday, FTSE 100 building products supplier Wolseley reported half-year results. Soft drinks maker AG Barr, independent hospital group Spire Healthcare Group, and John Laing Infrastructure Fund all provided full-year results.
In the economic calendar, aside from UK and US CPI, there is Markit manufacturing, composite and services PMI for France is at 0800 GMT, for Germany at 0830 GMT and for the eurozone at 0900 GMT. US Markit manufacturing PMI is at 1345 GMT.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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