MARKET COMMENT: UK Stocks Called Higher Ahead Of Retail Sales

LONDON (Alliance News) - UK stocks are set to open higher Friday, taking a cue from gains on Wall Street late Thursday and as investors take positions ahead of UK retail sales data.

After closing lower Wednesday, the positive sentiment that has buoyed Wall Street recently returned Thursday on the back of the much stronger-than-expected US PMI reading for February. The release saw the DJIA and S&P 500 close up 0.6%, with the NASDAQ Composite closing up 0.7%

The positive data also saw UK equities shake off early losses to close higher Thursday, and this positivity is set to continue at the London equity market open Friday. Both IG and CMC Markets are indicating that the FTSE 100 will open higher, at approximately 6,840 points, up from its 6,812.99 closing level Thursday.

"The main focus Friday will be the UK's retail sales for January," says David Page, senior macroeconomist at Lloyds Bank.

The number is expected to show that retail sales declined by 1% in January, having come in significantly above expectations in December.

At the same time, the Office for National Statistics publishes January's public finances data. "These are particularly important as January is traditionally the primary month of the year for tax receipts," says Page.

Expectations are for a monthly surplus of GBP9.0 billion on public net borrowing, compared with a deficit of 10.38 billion in the previous month.

In Asia, stocks trade largely higher, with the exception of the Shanghai Composite index. The Hang Seng is up 0.3%, while Nikkei in Tokyo has closed up 2.9%.

Japanese equities, in part, have been lifted by the release of the minutes from the Bank of Japan's January meeting. The members of the central bank's Monetary Policy Board said that the country's economic recovery is expected to continue, adding that inflation appears to be rising, a sign that it is making progress in its lengthy bid to end deflation.

The board decided to keep its monetary easing plan unchanged and retained its inflation forecasts for the next two years, strengthening expectations that the central bank may keep the policy steady at least for now.

Additionally, the Bank of Japan's decision on Tuesday to double the scale of the bank's lending scheme, allowing commercial banks to borrow from the central bank at cheaper rates, is likely to boost economic growth, Masayoshi Amamiya, an executive in charge of monetary policy affairs, said overnight.

In Europe, Italian CPI inflation data is released at 0900 GMT, ahead of the European Commission's economic growth forecasts at 1000 GMT.

In the afternoon, US existing home sales numbers are published at 1500 GMT, ahead of a speech by President of the Federal Reserve Bank of St. Louis James Bullard 1810 GMT.

In the corporate calendar, FTSE 250-listed Millennium & Copthorne Hotels has released full-year results.

Millennium & Copthorne reported that its pretax profit rose to GBP263.6 million in 2013, up from GBP171.3 million, while revenue jumped to GBP1.03 billion, from GBP768.3 million. The company said it remains cautiously optimistic about its 2014 performance.

Blue-chip Rolls-Royce has revealed that it has received a USD182.7 million US Air Force Contract, while Legal & General has made its first US acquisition, buying Atlanta-based investment manager Global Index Advisors Inc for up to USD50.4 million.

Royal Dutch Shell has reached a binding agreement to sell its Australia downstream businesses, excluding Aviation, to Dutch-owned oil trader Vitol for a total of about USD2.6 billion.

Meanwhile, the Financial Times reports that Royal Bank of Scotland Group is preparing a dramatic retrenchment that would see it become a much smaller UK retail and commercial bank, a move that is expected to see staff numbers slashed by at least 30,000 in the coming years,

By James Kemp; jameskemp@alliancenews.com; @jamespkemp

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