MARKET COMMENT: UK Stocks Set To Follow US And Asian Stocks Lower

Wed, 12th Mar 2014 07:38

LONDON (Alliance News) - UK stocks are set to open lower Wednesday, following on from weak sessions in the US and Asia, as investors continue to be starved of significant fresh data releases.

Meanwhile, a host of FTSE 100-listed companies have gone ex-dividend which is set to further weigh on the UK's blue-chip index Wednesday.

"Are investors starting to exhibit the first signs of concern that maybe the run higher in US equity markets and broader markets has run its course?" asks Michael Hewson, chief market analyst at CMC Markets.

The ongoing crisis in Ukraine and continued fears about a slowdown in China's economy continue to weigh heavy on investors shoulders.

Wall Street closed firmly lower on Tuesday, with the DJIA, NASDAQ Composite and S&P 500 down between 0.4 % and 0.5%.

Asian stocks have followed suit, with the Hang Seng and Shanghai Composite index trading down 1.6% and 0.2% prior to the UK equity market open. The Nikkei in Tokyo closed down 2.6% after the Japanese Cabinet Office revealed that confidence among Japanese households deteriorated for the third consecutive month in February.

The headline consumer confidence index dropped sharply to 38.2 in February from the downwardly revised 40.4 in January, missing expectations of a more modest decline to 40 from the originally reported 40.5.

In London, the FTSE 100 is indicated to open firmly lower by CMC Markets and IG, having closed at 6,685.52 on Tuesday. CMC Markets expects the index to open down at approximately 6,643 points, while IG indicates an even-lower opening level of 6,635.

In a light data calendar Wednesday, early focus will be on industrial production figures for the euro area at 1000 GMT.

Eurozone industrial production is expected to report a rise of 0.5% month-on-month in January, rebounding from a 0.7% decline in December. On a yearly basis, industrial production is forecast to rise by 1.9%, up from the 0.5% recorded in December.

"While this morning?s data is expected to point to continued modest recovery in the euro area, it is unlikely to make an impact on monetary policy expectations given European Central Bank President Draghi?s comments last week that monetary policy in the euro area will remain unchanged over the near term," says Carl Paraskevas, senior international macroeconomist at Lloyds Bank.

Also in the data calendar, US MBA mortgage applications information for the week ended March 7 is released at 1100 GMT. US Treasury Secretary Jack Lew gives a speech at 1800 GMT. There is no significant UK data scheduled.

In corporate news, FTSE 250-listed Ferrexpo and Hikma Pharmaceuticals, amongst others, have released full-year results for 2013 Wednesday. Ocado Group has released an interim management statement. Prudential is scheduled to release its full-year 2013 results at approximately 0815 GMT.

Pets at Home and Poundland will become the third and fourth British retailers to list in 2014 when conditional dealings start Wednesday.

Meanwhile, a large number of blue-chip companies have gone ex-dividend Wednesday, meaning that new buyers no longer qualify for the latest dividend payout from the company. The list includes HSBC, Standard Chartered, British American Tobacco, Meggitt, Randgold Resources, Land Securities, Hammerson, and Hargreaves Lansdown.

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