FTSE 100 preview: UK market seen opening lower despite US, Asian bounce

on Feb 5, 2014
Updated: Apr 9, 2020
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iNVEZZ.com, Wednesday, February 5: Britain’s benchmark equity index, the FTSE 100, is expected to open lower today, despite a modest rebound in US and Asian markets, with many analysts forecasting the bearish trend is set to continue for some time with risk aversion dominating the market.

The UK blue chip index is expected to open around 15 to 20 points, or about 0.3 percent, lower today, according to data from financial bookmakers. Yesterday, the Footsie fell for the fifth straight trading day, losing 16.39 points, or 0.25 percent, to end at 6,449.27, its lowest close since December 13. Disappointing reports by chip maker ARM Holdings (LON:ARM) and oil major BP (LON:BP) raised concerns that corporate earnings are not growing strongly enough to justify lofty company valuations, which were driven up last year by the Fed’s equity-friendly bond-buying programme. Indications of a slowdown in the US economic recovery together with Chinese growth concerns and lingering emerging market jitters also weighed on sentiment (FTSE 100 watch: US slowdown concerns fuel bearish sentiment).

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**Global markets**
US stocks rebounded yesterday from sharp losses on Monday thanks to some positive corporate earnings reports and optimistic factory orders data.
New orders for US factory goods fell 1.5 percent in December, less than the average economists’ estimate of a 1.8 percent decline in a Bloomberg survey. Excluding the volatile transportation sector, core factory orders rose for a third straight month, up 0.2 percent, suggesting that the manufacturing sector could withstand what appears to be partly a weather-related slowdown.

The benchmark S&P 500 Index gained 0.76 percent to close at 1,755.20, the Dow Jones Industrial Average rose 0.47 percent to 15,445.24, and the NASDAQ Composite Index climbed 0.86 percent to end the session at 4,031.52.
Asian markets tracked US markets higher. Japan’s blue chip index, the NIKKEI 225, recovered some of the losses from the big sell-off yesterday, climbing 1.23 percent to close at 14,180.38. The rally was buoyed by upbeat corporate earnings.

**Agenda**
Among FTSE 100 companies, pharma giant GlaxoSmithKline (LON:GSK) and stockbroker Hargreaves Lansdown (LON:HL) are to report results today.
GSK is expected to post a one percent increase in full-year revenue, with investors likely to focus on the group’s sales in China which took a severe hit in the third quarter (GSK share price: Investors eyeing China sales update).

Broker Charles Stanley expects Hargreaves Lansdown to report a 17 percent year-on-year rise in half-year revenues to £164.5 million. The UK’s largest broker announced last month fee changes and investors are anxious to find out how this will impact the company (Hargreaves Lansdown share price plunges after fee announcement).
On the macroeconomic front, the US ADP private employment report will be in focus today ahead of Friday’s non-farm payrolls data. Eurozone retail sales and services and whole economy PMI data for the UK, the Eurozone and the US are also scheduled for release.
Speeches by Federal Reserve Bank of Philadelphia president Charles Plosser and Federal Reserve Bank of Atlanta Dennis Lockhart could offer further insights into the Fed’s next stimulus moves after two other Fed presidents yesterday said the central bank will likely continue to cut its bond-buying programme by $10 billion at each of its forthcoming meetings unless the economy significantly undershoots expectations.
Unilever (LON:ULVR) is the only FTSE 100 company to go ex-dividend today, with the payout due to take 1.04 points off the index, according to a Reuters calculation.
Trade stocks with Hargreaves Lansdown from £5.95 per deal.
Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.

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