News Column

MARKET COMMENT: US Stocks To Open Lower As Ukraine Clashes Continue

May 9, 2014

Jon Darby

LONDON (Alliance News) - US markets look set to follow Europe lower Friday with investors continuing to exercise caution ahead of the weekend, as reports emerge of heavy clashed between government security forces and pro-Russian groups in eastern Ukraine, ahead of a planned weekend referendum on seceding from the country.

In the Ukrainian city of Mariupol, shots were fired after celebrations marking the Soviet victory over Nazi Germany in World War II. A leader of a self-proclaimed pro-Russian self-defence group said several activists had been injured.

Some weaker-than-expected trade data from Germany early Friday testified to the economic effect of the ongoing tension in Ukraine and the resulting sanctions in Russia. There has been little else in the economic calendar to shift sentiment, and US futures indicate that Wall Street is set for a lower open.

There was a divergence between US markets on Thursday, with the S&P 500 closing slightly lower while the DJIA managed to eke out a gain. There looks to be no such divergence Friday, with both markets set to open about 0.3% lower, while the Nadsaq Composite is indicated to open about 0.4% lower.

Apple may weigh on the technology-heavy Nasdaq Friday, following reports that it is in advanced talks to buy high-end headphone maker and music-streaming service Beats Electronics for USD3.2 billion. The deal would be Apple's largest-ever acquisition. The largest purchase to date by Apple, which has a USD151 billion cash pile, was its acquisition of NeXT Software for USD400 million in 1997. Apple shares are slightly lower in the pre-market.

Omnicom also looks set to open lower after a deal between it and Publicis, which would have created the world's largest advertising agency, collapsed earlier Friday. "It seems the two CEOs couldn’t agree over the split of power and duties in the newly formed company of equals," said CMC Markets market analyst Jasper Lawler.

There's no top-tier data in the economic calendar from the US Friday. Wholesale inventory growth is expected to remain stable at 0.5% in March. After the market close, Minneapolis Fed president Narayana Kocherlakota talks at 2200 GMT.

Still to come from the UK, the the National Institute of Economic and Social Research is due to release its UK GDP estimate for the three months to April at 1400 GMT. Many commentators are expecting the institute to raise its estimate from its previous estimate of 0.9% growth on the preceding three months.

Heading toward the US market open, UK indices are little changed from their lower open. The FTSE 100 is down 0.4% at 6,812.65, the FTSE 250 is down 0.4% at 15,905.51, and the AIM All-Share is down 0.5% at 806.73.

The dollar has regained some ground against both the pound and the euro Friday, on the back of the mixed UK production data earlier and the knock to the German trade surplus. Currently, the pound is lower at USD1.6867, and the euro is down at USD1.3786.

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Source: Alliance News

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