London pre-open: FTSE to move lower ahead of Eurozone data

3rd Jun 2014 07:40

UK stocks are expected to reverse a significant portion of Monday's losses ahead of the release of the latest Eurozone inflation and unemployment rate figures later on today. City sources predict the FTSE 100 will open around seven points below yesterday's close of 6,864.10.That came after US stocks finished mostly higher last night, with two out of the three main benchmark indices setting new records after the Institute for Supply Management (ISM) corrected earlier erroneous data.Today's data from the Eurozone comes ahead of the European Central Bank's (ECB) policy meeting on Thursday, with President Mario Draghi ready to act to combat weak inflation and high unemployment this month if necessary. Economists expect Eurozone consumer prices to fall to 0.9% in May from 1% previously, which would add more pressure on the ECB to change policy at its Thursday meeting. The ECB is targeting inflation at just under 2%.The unemployment rate is expected to hold at 11.8% in April.Berenberg Senior Economist Christian Schulz said it predicts the ECB will ease its stance and "keep the door wide open for further steps".He sees two clear favourites for action: a further cut to the main interest rate from 0.25% to 0.1% and a negative deposit rate.Looking at this morning's wider picture, Joshua Mahony from Alpari, said: "The European markets are seeking to buck the recent trend of positivity today with futures pointing to a pause in the incessant strength seen across the global developed markets in recent weeks. "This comes in stark contrast to yet another strong Asian session which saw the Nikkei trade at a two month intraday high following strong data out of China. However, the pause seen across European indices futures along with most of the euro pairs is likely attributed to the release of today's CPI figure out of the Eurozone which will likely provide markets with an idea of whether Mario Draghi will take strong action at the ECB meeting on Thursday."Today will also see the release of UK construction PMI, which has been notably less than impressive in recent months. In this morning's company news, foreign exchange (FX) movements put a dampener on third-quarter results at heating and plumbing products group Wolseley, though strong growth in the US and Nordic regions drove an acceleration in like-for-like sales. Revenues from ongoing businesses totalled £3.05bn in the three months to April 30th, 0.8% lower on a reported basis than the same time last year. At constant FX rates though, revenues were up 6%.South West Water owner Pennon unveiled higher annual profits and dividends, but said its Viridor landfill and waste recycling business took a hit from cut-throat pricing by rivals. Out-of-town retail and warehouse property group LondonMetric has reported a profit of £125.3m and says the market in the second half of the year has strengthened and rational pricing has returned across the UK. The FTSE 250 company said the UK commercial property market is in the middle of the economic cycle, with an improving economy, a flow of reasonably priced credit and strong competition for supply, which makes the investment market very competitive.NR