News Column

European Stocks Set To Follow Wall Street Lower

August 5, 2014

VIENNA (Alliance News) - European stocks are set to open lower on Wednesday after the Standard & Poor's 500 closed at a more-than two-month low overnight amid escalating tensions in Ukraine. A renewed buildup of Russian troops on Ukraine's border raised the specter of a possible invasion, sparking fresh concerns about the region.

Fighting in eastern Ukraine reached the main rebel stronghold of Donetsk on Tuesday as Ukrainian troops made gradual advances to retake the city from pro-Russia separatists. Pentagon Press Secretary Navy Rear Adm. John Kirby said a small survey and assessment team, comprising of 12 US service members, was sent to Ukraine after receiving a request from the State Department.

In the Gaza strip, Israel said it withdrew the last of its ground forces under a temporary truce after four weeks of intense fighting. Delegates representing Israel and Hamas are in the Egyptian capital Cairo to hold peace talks on a broader deal to stop the violence which has cost far too many lives.

The Asian markets are broadly lower, extending the previous session's losses, amid continued violence in Ukraine and fears of a sooner-than-expected increase in US interest rates.

In economic releases, shop prices in the UK declined at the fastest rate in survey-history in July, data from the British Retail Consortium showed, indicating ebbing inflation rates as the Bank of England begins its monthly policy meeting Thursday. The shop price index fell 1.9% in July from a year earlier, marking its fastest rate of deflation since the series began in December 2006. Economists had expected a 1.6% drop in shop prices.

UK industrial production data is slated for release later in the day, with economists expecting output to rise 1.5% year-over-year in June, after a 2.3% increase in May. German statistical office Destatis is scheduled to release its factory orders report, with orders expected to rise 1.1% in June from a year earlier, following a 5.5% increase in May.

In corporate news, France has announced a USD13.4 billion energy plan designed to reduce its dependence on atomic power from 75% to 50%.

Italian bank UniCredit SpA reported a near 12% increase in second-quarter profit, benefiting from lower loan-loss provisions, higher net interest income and fees.

British Airways announced that it has halted all flights to and from Liberia and Sierra Leone for one month due to concerns over the deadly Ebola outbreak in West Africa.

Greece-based bulk shipping company DryShips Inc. reported a loss for the second quarter that narrowed from last year on strong revenue growth.

Dutch financial services company ING Group NV reported second-quarter net income of 1.067 billion euros, up from 895 million euros last year.

Reinsurer Swiss Re reported that its second-quarter net income increased to USD802 million from USD786 million last year.

European stocks closed higher on Tuesday, as companies including Credit Agricole and Deutsche Post reported better-than-expected earnings and Spanish telecom giant Telefonica offered to buy Paris-based Vivendi's Brazilian unit.

The German DAX rose 0.4% and France's CAC 40 added half a percent, while the UK'sFTSE 100 ended little changed.

US stocks retreated overnight, as mixed corporate earnings, speculation over Fed policy on interest-rate hikes and growing fears that tensions could flare up between Russia and Ukraine overshadowed upbeat economic reports on factory orders and the services sector. The Dow fell 0.8% and the S&P 500 lost a percent to set fresh two-month closing lows, while the tech-heavy Nasdaq dropped 0.7%.

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Source: Alliance News

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