LONDON MARKET EARLY CALL: Lower ahead of eurozone GDP, NatWest results

(Alliance News) - Stock prices in London are seen opening lower on Friday, as Asian equities fell ...

Alliance News 30 July, 2021 | 5:57AM
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(Alliance News) - Stock prices in London are seen opening lower on Friday, as Asian equities fell sharply once again, and ahead of another busy day for UK corporate earnings.

The data calendar has a spate of gross domestic product updates from Europe, including Germany at 0700 BST and the eurozone at 1000 BST.

IG futures indicate the FTSE 100 index is to open 42.8 points lower at 7,035.62. The blue-chip index closed up 0.9%, or 61.79 points at 7,078.42 on Thursday. For the week, the large-cap index has so far gained 0.7%.

"The big question today as we come to month-end is, will the recovery seen in the past two days be enough to see European markets post their six successive monthly gains," CMC Markets analyst Michael Hewson commented.

So far in July, the FTSE 100 is up 0.6%.

In China on Friday, the Shanghai Composite was down 0.9%, while the Hang Seng index in Hong Kong dropped 2.4%. The Nikkei 225 in Tokyo was 1.8% higher and the S&P/ASX 200 in Sydney lost 0.2%.

Save for a promising bounce on Thursday, Asian equities have largely struggled this week, amid Chinese regulatory moves in the technology sector.

OANDA analyst Jeffrey Halley noted Asian equities shrugged off a strong showing from Wall Street, with equity prices "heading directly South" on Friday.

"I cannot see any particular headlines driving the fall this morning in Asia and can only speculate that a combination of factors may be driving investor sentiment. A Friday 'delta-dip' is undoubtedly one factor, with Covid-19 cases rising in Japan, South Korea and appearing in three provinces in China," Halley added.

"China also releases official manufacturing and non-manufacturing PMIs this weekend. After some middling GDP and jobless claims data from the US overnight, that suggests the recovery remains on course, but at a slower pace, investors may be concerned the China PMIs could signal something similar."

In New York on Thursday, the Dow Jones Industrial Average and S&P 500 gained 0.4%, while the Nasdaq Composite climbed 0.1%.

New US jobless claims fell last week, though at a slower pace than expected, with separate numbers on Thursday showing the country's economic expansion was smaller than forecast in the second quarter.

According to an initial estimate from the Department of Commerce, US gross domestic product grew at an annual rate of 6.5% in the second quarter of 2021. Chunkier growth of 8.5% was forecast, according to consensus cited by FXStreet. First-quarter growth was revised down to 6.3% from 6.4%.

CMC's Hewson noted: "Somewhat counter-intuitively, the disappointment over the economic data helped to underpin markets into the close simply on the basis that it pushes back the likelihood that the Federal Reserve will feel inclined to taper its asset purchase program in any way aggressively."

Amazon shares tumbled 7.4% after hours as its second-quarter revenue fell short of lofty consensus expectations.

For the three months to the end of June, total net sales surged 27% to USD113.08 billion from USD88.91 billion a year ago. However, the market had been looking for a sales figure just above USD115 billion.

Against the yen, the dollar was trading at JPY109.54 on Friday morning UK time, unchanged from at the London equity market close on Thursday.

In New York, traders will have one eye on the US personal consumption expenditures reading, due at 1330 BST. Core PCE is the US Federal Reserve's preferred inflationary gauge. Eurozone unemployment and consumer price inflation figures are released at 1000 BST.

In data already out, the French economy grew 0.9% quarter-on-quarter in the second quarter of 2021. French GDP is now 3.3% below pre-virus levels.

The French economy was stable in the first quarter, after plunging 8.0% in the whole of 2020.

The euro stood at USD1.1876 early Friday, down from USD1.1885 at the European equities close Thursday. The pound fetched USD1.3936, down from USD1.3967.

As a hectic week for earnings draws to a close, Friday's corporate calendar holds results from British Airways-parent International Consolidated Airlines, educational publisher Pearson, and lender NatWest. Miner Glencore issues a trading update.

Brent oil was quoted at USD75.40 a barrel early Friday, down from USD75.51 at the London equities close on Thursday. Gold was trading at USD1,827.26 an ounce, down from USD1,829.48.

By Eric Cunha; ericcunha@alliancenews.com

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Amazon.com Inc 179.22 USD -1.14

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