News Column

MARKET COMMENT: UK Stocks Set To Open Flat, German Growth In Focus

May 22, 2014

Jon Darby

LONDON (Alliance News) - UK stocks are set to open broadly flat Friday, with no fresh UK data in the calendar and few scheduled corporate releases to shift investor sentiment ahead of the long weekend.

US markets made modest gains Thursday, with the DJIA up 0.1% and the S&P 500 up 0.2%. A similar picture in Asia has seen indices move marginally higher, with the exception of the Japanese Nikkei, which made stronger gains, closing up 0.9%.

In London, the FTSE 100 has traded in a very tight range over the week so far, dropping 0.5% in total since Monday and closing flat on Thursday at 6,820.56. Spread betters are indicating that an equally quiet start can be expected Friday, with the leading index expected to open just fractionally lower.

The second estimate of first-quarter German GDP data, already released Friday, has reiterated the first reading that Europe's largest economy grew at 0.8% over the period, speeding up from 0.4% in the fourth-quarter of 2013. On an annual basis, growth is seen as slightly faster than the initial estimate, with the year-on-year print up to 2.5% from the original reading of 2.3%.

There has been little reaction in the euro at this early stage. Ahead of the equity market open the single currency trades at USD1.3646. The pound, meanwhile, trades at USD1.6875.

With no data from the UK Friday, the focus remains on Europe throughout the morning, with the German May IFO economic sentiment survey results due out at 0900 BST.

PMI numbers from Germany on Thursday indicated strong expansion and the country continuing to act as Europe's engine room of growth.

"This prospect should be further supported by today’s IFO business climate index for May," said Lloyds Bank senior economist Jonathan Thomas.

Results of Thursday's European elections will be of investor interest as they are reported throughout the day. "The performance of the increasingly popular euro-sceptic parties across Europe will be an important gauge of how much political will there is to carry out necessary fiscal and structural reforms to promote competitiveness, growth and employment," said CMC Markets market analyst Jasper Lawler.

In the UK, early indications from local elections suggest that euro-sceptic party UKIP may have had a good night, with press reports suggesting that if Thursday's elections are an indication of next year's general election, UKIP would gain at least one seat in the House of Commons.

In the UK corporate calendar Friday, full-year results have already been released from Quintain Estates & Development, along with fellow real-estate development company Assura Group. Interim management statements are also out from Close Brothers Group, Moss Bros, and Smiths Group.

From the US Friday, there is just new home sales data due in the afternoon at 1500 BST.

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Source: Alliance News

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