FTSE 100 set for modestly firmer tart ahead of retail sales data

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UK equities are expected to open modestly firmer ahead of a slew of macroeconomic releases expected this morning.

Spread betting quotes indicate the FTSE 100 will open around 10 points higher at 7,030.

US markets were on the up yesterday with the Dow Jones climbing 188 points to 34,084 and the S&P 500 pushing forwards by 43 points to 4,159.

In Asia this morning the mood has been positive in Japan but negative in Hong Kong.

Japan’s Nikkei 225 is up 217 points at 28,315 after the Japanese consumer prices index fell by 0.4% in April, while the Japan Jibun Bank Composite Flash Purchasing Managers’ Index (PMI) for May declined to 48.1, much lower than expected.

“As we look ahead to the day ahead, the main focus is set to be on the latest flash PMIs for May, from France, Germany, the UK and the US. Before that we have UK retail sales for April,” reported CMC’s Michael Hewson.

“The direction of travel for April retail sales is likely to be for a similarly positive number in the wake of the 12th April easing measures, something that was borne out by a big jump in the recent BRC retail sales numbers which showed a decent improvement in April,” Hewson said.

“We also have the latest flash PMIs for May which if the recent April numbers are any guide are likely to be similarly positive.

“The April PMIs painted a robust picture with services activity hitting a six and a half year high at 61, while manufacturing rose to 60.9, an 8-month high.

“UK companies were reporting higher demand for both goods and services, which in turn is causing some cost-push inflation, while the jobs market is also looking good with firms being encouraged to take on extra staff at a rate not seen in over three and a half years. Today’s May flash PMIs are expected to be similarly positive with services activity expected to rise to 62.2, while manufacturing is predicted to remain steady at 60.8,” Hewson said.

“All in all, optimism is high with the only question being whether or not what we are seeing is sustainable through the summer,” was Hewson’s conclusion.

As for UK company news, Close Brothers Group PLC (LON:CBG) has been in its counting-house, counting up its money ahead of its fiscal third-quarter update.

“Bad debts have stayed under control so far and Close have reported some encouraging lending data up to now. The market will be hoping to see lending accelerating with muted levels of competition at this stage of the cycle. The future path of bad debts will be important, especially with furlough schemes heading toward an end,” said Steve Clayton, the fund manager of the Hargreaves Lansdown Select Fund.

Around the markets

  • Sterling: US$1.4184, down 0.05 cents
  • 10-year gilt: 0.84%, down 1.06 basis points
  • Gold: US$1,877.20 an ounce, down US$4.70
  • Brent crude: US$65.25 a barrel, up 14 cents
  • Bitcoin: US$39,881, down US$226

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