MARKET COMMENT: UK Stocks To Open Flat Ahead Of US GDP Revision

Thu, 29th May 2014 06:37

LONDON (Alliance News) - UK stocks are set to open flat to fractionally higher ahead of the US first-quarter GDP revision, which provides the main economic focus for Thursday but doesn't come until later in the day.

Trading so far this week, which started with UK and US bank holidays and now sees half of Europe closed for Ascension Day, has been fairly subdued, particularly given a light data calendar and the major upcoming event of next week's European Central Bank meeting.

US markets closed slightly lower across the board Wednesday, while overnight Asian markets have been mixed, with the Shanghai Composite 0.2% lower, the Hang Seng 0.2% higher, and the Nikkei flat, as the same lack of direction afflicts markets around the globe.

The FTSE 100 closed just fractionally higher on Wednesday at 6,851.22, and with a morning bereft of top-tier data drivers spread betters are indicating that it will open just marginally higher than that Thursday at 6,855.00.

"It is not often that markets will pause for a whole two weeks in anticipation of an announcement. However Mario Draghi?s stance on monetary policy will be closely watched, and any hint of a change will be jumped on by traders who are nervous that next week?s numbers could cause volatility no matter what the outcome," said Alpari chief market analyst James Hughes.

While next week's ECB meeting continues to loom over markets movements, the US GDP revision at 1330 BST will be the main data event Thursday. Following an initial print at the end of the quarter that indicated just 0.1% growth, corporate earnings, particularly in the retail sector, came in poorly, leading analysts to believe that the winter freeze actually had a greater impact than that preliminary figure indicated. Economists now expect the economy to have shrunk by 0.2% over the first-quarter.

"With such a focus put on the fact that the number was a freak due to the weather there will be added pressure when next quarter's figures are released that the number jumps significantly higher," says Alpari's Hughes.

US initial jobless claims and personal consumption numbers are due at the same time as the GDP data, with a small fall in weekly claims to 318,000 from 326,000 expected, along with an unchanged level of consumption price growth at 1.4%.

There's no UK data due during the morning, and very little of interest from Europe given the market holidays.

In the UK corporate calendar Thursday, full-year results have already been released from sugar maker Tate & Lyle, showing a drop in pretax profit to GBP290 million from GBP301 million previously as the group continues to struggle with lower Sucralose pricing.

Full-year numbers are also out from Severn Trent and Helical Bar, along with a first-quarter trading statement from Kingfisher Group.

Temporary power supplier Aggreko Thursday has confirmed the appointment as CEO of Centrica's Chris Weston.

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