News Column

MARKET COMMENT: US Stocks Set To Follow UK, Europe Lower

June 3, 2014

James Kemp

LONDON (Alliance News) - US stocks are set to follow their UK and European counterparts lower Tuesday, following a volatile session on Monday, as investors take their positions ahead of a busy second-half of the week.

After a positive start to trading on Monday, US equities fell sharply following a report by the Institute for Supply Management that showed an unexpected drop in its reading on US manufacturing activity that generated some uncertainty about the apparent strength of the US economic recovery from the weather-induced weakness seen in the winter.

However, stocks climbed well off their lows after ISM revealed that the data was incorrect due to a series of technical glitches.

Eventually, the data, which had to be revised twice, showed that the purchasing managers index inched up to 55.4 in May from 54.9 in April, in line with economists' estimates.

The S&P 500 and DJIA closed up 0.1% and 0.2%, respectively, while the NASDAQ Composite closed down 0.1%.

On Tuesday, UK and European equities trade lower following a busy morning of economic data and ahead of the highly anticipated European Central Bank policy meeting on Thursday.

"Itís not unusual to see the more cautious approach from traders in the lead up to such a huge decision and I wonít be surprised if it continues for the next couple of days," says Craig Erlam, a market analyst at Alpari.

Prior to the Wall Street open, the FTSE 100 is down 0.6% at 6,822.13, the FTSE 250 is down 0.7% at 15,974.67, and the AIM All-Share index is down 0.3% at 810.07.

Meanwhile, the CAC 40 in Paris is down 0.3%, while the DAX 30 in Frankfurt is down 0.6%.

This negative sentiment is expected to roll into the US session, where, ahead of the New York bell, the DJIA is called to open down 0.3%, with the NASDAQ Composite and S&P 500 called to open down 0.4%.

However, "with ADP numbers tomorrow kicking off the busy half of the week, today is probably just going to see some nervous shifting of positions," says Chris Beauchamp, a market analyst at IG.

"The US session is looking a little quiet again, with the major events being saved for the second-half of the week," says Erlam.

The Commerce Department is scheduled to release its factory orders report for April at 1500 BST. Economists expect factory orders to have risen by 0.5% month-over-month, following a 0.9% increase in March.

Also in the US data calendar, the Redbook of retail sales is published at 1355 BST, with the ISM New York index released at 1445 BST.

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Source: Alliance News

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