LONDON (Alliance News) - UK shares are set to open lower Thursday, following declines in Wall Street and Asia overnight and as uncertainty about the UK General Election hangs over investor sentiment.
IG says futures indicate the FTSE 100 to open 22 points lower at 6,911.2. The index closed up 0.1% at 6,933.74, buoyed by better-than-expected Purchasing Managers' Index scores from the eurozone and the UK.
"We have now approached the business end of the week in the markets, and I?m expecting investors to start getting a little anxious," says Oanda analyst Craig Erlam.
The final polls ahead of the election continued to show the Conservatives and Labour almost tied, suggesting that neither will win enough seats to form a majority government, and there may then follow days of horse trading as the parties try to form a coalition or a minority government that's supported by other parties in key matters such as the budget.
Analysts are concerned about potential policies put forward by both parties, including a Conservative pledge to hold a referendum on whether the UK stays in the EU, and Labour pledges to cap energy prices and break up energy companies, amongst other policies seen as anti-business.
"This creates a lot of uncertainty that could weigh on the markets today. This is particularly true for the pound, as today?s result will have an impact on growth expectations, interest rate forecasts and whether we?ll get a referendum on EU membership. The FTSE will be less impacted due to the global nature of many of the stocks in the index making it less sensitive to political changes at home," writes Erlam.
The pound rose against the dollar Wednesday, strengthening against the greenback as payroll processor ADP released a report showing that US private sector employment increased by much less than expected in the month of April. The sterling trades at USD1.5243 Thursday morning.
Wall Street ended lower Wednesday. The DJIA and S&P 500 both ended down 0.5%, while the Nasdaq Composite ended down 0.4%.
In Asia on Thursday, the Japanese Nikkei 225 went back to trading after a holiday and trades down 1.4%. In Hong Kong, the Hang Seng trades down 1.0% and the Shanghai Composite is trading down 2.0%.
Brent crude is quoted at around USD67.39 a barrel Thursday, and US benchmark West Texas Intermediate is quoted at USD60.56 a barrel. Gold is quoted early Thursday at USD1,188.81 an ounce.
In a busy corporate calendar Thursday, Aviva and RSA Insurance Group issue first-quarter interim management statements, while Wm Morrison Supermarkets issues an interim management statement. EasyJet releases its April traffic statistics, while BT Group publishes its fourth-quarter results. Derwent London, Telecity Group, Beazley, Esure Group and Kennedy Wilson Europe Real Estate issue first-quarter interim management statement, while Randgold Resources releases first-quarter results. Trinity Mirror issues a trading statement.
In the economic calendar Thursday, German factory orders are due at 0700 BST. In the US, Initial jobless claims are due at 1330 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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