LONDON (Alliance News) - London share prices are set to open lower Friday, as a third consecutive negative close in the Dow 30 and S&P 500 indices in New York and weak economic data from China are expected to drag down European major indices.
Investors also will pay attention to the release of purchasing manager's indices from several eurozone countries and the US. Manufacturing and services PMIs for France, Germany and the eurozone are expected at 0800 BST, 0830 BST and 0900 BST, respectively. In the US, manufacturing PMI is due at 1445 BST.
"France is expected to see an improvement in its manufacturing offset by a slowdown in services while Germany is expected so see slight improvements for both, leaving ?composite? PMIs steady in July," says CMC Markets analyst Jasper Lawler. "Given the crisis in Greece and the threat to the currency-area; a level state of industry confidence shows the underlying recovery in the European economy is intact."
Looking to the eurozone readings, Lloyds Bank notes that the euro area PMIs have remained relatively resilient in recent months, even as the Greek crisis intensified. Both eurozone manufacturing and services PMIs improved in June, leaving the average for the second quarter slightly higher than in the first quarter.
"For July, we have pencilled in a small downward correction for the manufacturing index to 52.3 from 52.5 and the services index to 54.2 from 54.4," the bank comments. "These levels remain consistent with a moderate pace of growth and a continuation of European Central Bank?s asset puchase programme."
IG says futures indicate the FTSE 100 to open 16 points lower Friday at 6,638.80 points. The index closed down 0.2% at 6,655.01 on Thursday.
In Asia on Friday, the Japanese Nikkei 225 closed down 0.7%. In China the Hang Seng is down 0.9%, but the Shanghai Composite is up 0.6%.
China's manufacturing sector contracted again in July and at an accelerated pace, the latest survey from Caixin revealed on Friday, with a flash purchasing manager's index score of 48.2. That marked a 15-month low score, and it was well shy of forecasts for a score of 49.7. It was down sharply from 49.4 in June, and it moves further beneath the boom-or-bust line of 50 that separates expansion from contraction.
Wall Street ended lower Thursday, with the DJIA down 0.7%, the S&P 500 down 0.6% and the Nasdaq Composite down 0.5%. Thursday was a busy day in terms of earning reports in the US, with tech giants Amazon.com and AT&T issuing updates, among others.
Online retailer Amazon.com said Thursday after the US stock markets closed that it swung to a second quarter profit, as sales surged 20%. The company's quarterly earnings came in as a surprise for Wall Street analysts who were expecting the company to report a loss. The company also gave an upbeat sales forecast for the current quarter.
For the second quarter ended June 30, 2015, the Seattle, Washington-based company reported net income of USD92 million, compared to a net loss of USD126 million for the year-ago quarter. Before this, Amazon had posted quarterly profit just once in the last four quarters.
Meanwhile, AT&T on Thursday reported a decline in second-quarter profit, hurt by one-time expenses while revenues inched up on the back of customer additions, partly offset by a stronger dollar.
Following a better-than-expected US jobless claims data released Thursday, the dollar strengthened against other major currencies as the pound, but also dragged down gold prices. Overnight, the yellow metal price has retreated close to Monday's levels, when it touched lows it hasn't seen since early 2010. Gold is quoted Friday morning at USD1,085.58.
On the UK corporate front, Vodafone Group confirmed its guidance for its current financial year, as it saw revenue fall 0.9% on a reported basis, saying it made a "good start to the year."
It attributed the decline in revenue to a 7.3 percentage point hit from foreign exchange movements offset a 3.1 percentage point boost from merger and acquisition activity. On an organic basis, which Vodafone defines as being on a comparable basis, including merger and acquisition activity and movements in foreign exchange rates, revenue rose 3.3%.
At the time of its full year results in May, Vodafone had guided Ebitda in the range of between GBP11.5 billion and GBP12.0 billion, and to be free cash flow positive after all capital expenditure, before mergers and acquisitions, spectrum and restructuring costs for its current financial year.
Also in the economic calendar, US new home sales are due at 1500 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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