MARKET COMMENT: UK Equities Set To Open Lower After Overnight Profit Taking

Tue, 19th Nov 2013 07:48

LONDON (Alliance News) - UK equities are set to open lower Tuesday, following a pull back in US equities Monday, started partly by comments by US billionaire investor Carl Icahn while speaking at the Reuters Global Investment Outlook Summit.

Although the S&P 500 and the DJIA both pushed to intraday record highs, some profit taking was prompted by the influential investor's comments that he is "very cautious" on the stock market and that a "big drop" is likely as companies are fueled more by low borrowing costs than management's efforts to boost results.

The S&P 500 ended Monday 0.4% lower and the DJIA 0.1% higher.

"It is getting to the point that investors care less about the fundamentals of the markets and the companies that they invest in, and more about the direction of policy of the central banks, and in particular the Federal Reserve", says CMC Chief Market Analyst Michael Hewson.

Asian stocks are trading lower despite a stronger than expected economic index reading in Japan. Japan's leading economic index strengthened in September, but at a slower than initially estimated pace, final data from the Cabinet Office showed Tuesday. The leading index that is designed to measure changes in the direction of the economy rose to 109.2 in September from 106.8 in August. The preliminary reading for September was 109.5. Even so, the Nikkei is trading down 0.3% and the Hang Seng is down 0.1%.

The sentiment is set to follow into UK equities Tuesday, with spread betters expecting the FTSE 100 to open 0.4% lower at 6697.80.

The German and European ZEW Survey's are due for release at 1000 GMT and will provide the economic focus of the day. The indicator of economic sentiment is expected by economists to have risen in Germany to 54.0, from 52.8 previously. Across the eurozone the indicator is expected to show a rise to 63.1, from 59.1 previously.

In the afternoon, there is a speech from the Treasury Secretary Jack Lew at 1345 GMT, while the 1355 GMT the weekly redbook of retail sales is scheduled.

In a busy day in the corporate calendar Tuesday, blue-chips ITV, Smiths Group, AMEC, Melrose Industries and Intertek Group are joined by FTSE 250-listed Galliford Try and Keller Group, amongst others, in releasing interim management statements. FTSE 100-listed easyJet and mid-caps Enterprise Inns, Halma and Homeserve, amongst others report interim results.

By Jon Darby; jondarby@alliancenews.com; @jondarby100