LONDON (Alliance News) - UK stocks are set to open lower Friday as investors continue to exercise caution amid an unsettled geopolitical landscape, following the crash of a passenger airliner in the contested region of eastern Ukraine on Thursday.
Accusations are being traded over the responsibility for the tragedy, with some pointing to the plane being shot down by Ukrainian separatist rebels in the region.
With markets already on high-alert, investors have been given further reason to tread carefully Friday, as Israel has launched a long-threatened ground invasion of the Gaza strip, following the failure of ceasefire efforts after a 10-day bombing campaign.
News of the plane crash broke just ahead of the European market close Thursday, sending stocks to session lows. The sell-off continued in the US, where the DJIA closed down 1.0%, the S&P 500 fell 1.2%, and the Nasdaq Composite lost 1.4%.
The losses look set to continue Friday with futures indicating that the FTSE 100 will open 0.2% lower at about 6,720 points.
"The downing of Malaysian Airlines flight MH17 has been accompanied by a ground assault operation throughout Gaza by the Israeli armed forces, sending investors running for the nearest safe haven," said Alpari Research analyst Joshua Mahony.
Gold jumped almost USD20 to a weekly high USD1,324.7 per ounce on the unsettling geopolitical news, while Brent crude oil rose almost USD2 to a weekly high of USD108.57 per barrel. Both the commodities have eased back a little since but continue to trade at elevated levels ahead of the UK equity market open.
The UK and European economic calendar is empty Friday, leaving the focus on further updates from Ukraine, as well as the continued release of US second-quarter corporate earnings, which have so been been broadly positive and, up until Thursday's shock news, were doing a good job of supporting equity valuations.
"Equity investors are clearly buoyed by the solid earnings results that we have seen so far, especially from the banking sector," said Forex.com analyst Fawad Razaqzada.
Big US technology names Google and IBM reported after the closing bell on Thursday. Google said its revenue was up 22% annual in the second quarter and is seeing its shares rise in the pre-market, while IBM is a little lower in the pre-market despite saying its earnings per share were up 34% year-on-year. Bank of New York Mellon is due to report Friday, with General Electric also due to release its numbers.
In the UK corporate calendar, updates have been released from Development Securities and Record PLC, while investors are still waiting for any news from Shire on a potential firm offer from AbbVie. Friday is the deadline for AbbVie to make a firm offer or walk away from any deal for six months, under UK takeover rules.