FTSE 100 preview: Muted start expected ahead of UK retail sales data

on Aug 20, 2015

The FTSE 100 is set for another subdued start today after yesterday the Footsie closed 1.88 percent lower at 6,403.45. According to trading platform IG, the index is set to ease further today, opening around six points lower at 6,397, with no scheduled corporate releases to provide direction.

Greece, which has dominated European markets in recent months, appeared to be abating as a risk factor, after the German parliament passed the latest bailout deal yesterday. With the aid package approved, Athens is expected to make a €3.2 billion payment to the European Central Bank later today.
On the data front, UK retail sales figures are due out at 09:30 BST. The report from the Office for National Statistics is forecast to reveal that retail sales rose 4.3 percent year-on-year in July, compared to 4.2 percent in June. On a month-on-month basis sales are predicted to have increased 0.4 percent in July following a 0.2 percent fall a month earlier. Any signs of further economic recovery in the UK are likely to lift expectations of an interest rate hike by the Bank of England.

Likewise, the US Federal Reserve is weighing the timing of its first interest rate increase in nine years. Minutes from last month’s Fed monetary policy meeting indicated yesterday that conditions for a rate hike had not yet been met, due primarily to easing inflation. The central bank is now keeping a close watch on today’s report on existing home sales and jobless claims.
US stocks closed lower yesterday. The Dow Jones Industrial Average shed 0.91 percent to 17,351.4, the S&P 500 fell 0.82 percent to 2,079.63, while the Nasdaq eased 0.8 percent, to 5,019.
In Asia, concerns about slowing growth in China have sent shares to two-year lows. By 07:07 BST, the MSCI’s broadest index of Asia-Pacific shares outside Japan had fallen 0.88 percent to 507.69. Meanwhile, Tokyo’s Nikkei 225 was 0.80 percent down at 20,060.89.

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