FTSE 100 preview: Index set for another cautious opening

on May 20, 2014
Updated: Apr 9, 2020
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iNVEZZ.com, Tuesday, May 20: Britain’s blue-chip index looks set for another cautious start this morning with stock valuation concerns and uncertainty over whether the European Central Bank (ECB) will undertake stimulus measures, keeping traders on the sidelines.

On the corporate front, investors today are looking out for updates from Vodafone (LON:VOD) and Marks and Spencer (LON:MKS).

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**Footsie called marginally up**
According to IG, the UK benchmark index is called up six points at 6,850. Investors are expected to remain cautious today focusing on stock valuations and the possibility of further monetary stimulus from the ECB next week.

Bloomberg yesterday quoted Witold Bahrke, a senior strategist at PFA Asset Management, as saying that risk sentiment around European assets was “increasingly sending warnings signs”.
“Earnings have been coming in mixed. The clear focus at the moment is and remains the ECB, which will probably cut rates next month,” Bahrke pointed out. “But the big question is if it will be enough to lift markets further. Valuation aspects are also a part of the tendency towards risk aversion.”

In the US, stocks closed higher yesterday despite mixed economic reports. Investors were cautious in Asian trading today with the Bank of Japan kicking off a two-day policy meeting and after Thailand’s army declared martial law in Bangkok following months of political turmoil.
The Footsie posted a drop yesterday, closing 0.2 percent lower at 6,844.55 points. The index was pressured by a hefty fall in AstraZeneca Plc’s (LON:AZN) shares, which slumped after the Anglo-Swedish drugmaker rejected Pfizer Inc’s (NYSE:PFE) final £55-per-share bid. (AstraZeneca share price: Board rejects Pfizer’s sweetened bid) AstraZeneca’s share price closed 11.11 percent lower at 4,287.50p.

Today’s economic releases include the UK’s consumer price index for April due out at 09:30 BST.
Inflation is expected to have accelerated to 1.7 percent from 1.6 percent. Germany’s producer price index for April is scheduled to be released at 07:00 BST.

**Vodafone, Marks & Spencer in focus**
Vodafone and Marks and Spencer (LON:MKS) are releasing annual results this morning.
IG reports that the consensus estimate for Vodafone is for revenue of £43.6 billion and operating profit of £5.8 billion. In February, the telecoms giant posted a slightly lower-than-expected drop in quarterly service revenues with continuing declines in Europe offsetting solid growth in emerging markets. (Vodafone share price: Q3 service revenue falls less than expected)
Marks and Spencer is expected to report a 7.5 percent drop in annual pre-tax profit, marking a third consecutive fall after a three-year investment plan failed to revive the group’s underperforming non-food business. (Marks and Spencer share price: Retailer poised for downbeat annual results)

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