London pre-open: FTSE to open lower after IMF forecast, ahead of GDP

25th Jul 2014 07:34

UK stocks are expected to move lower at the opening bell after the International Monetary Fund (IMF) once again lowered its global growth predictions and ahead of the release of the first estimate of UK GDP.Following a mixed picture of trading in the US and Asia overnight, City sources predict the FTSE 100 will open around 17 points lower than yesterday's close of 6,821.46.The IMF has lowered its forecasts for global growth from the 3.7% figure given in April to 3.4%, attributing the change to events in Ukraine and Iraq. US stocks had a mixed day on Thursday, with the Dow and Nasdaq both closing just below flat but the S&P 500 marginally higher as weekly jobless claims fell more than expected while new home sales numbers fell short of their target.Initial jobless claims recorded by the Labor Department dropped by 19,000 to 284,000 in the week ended July 19th, an eight-year low. It followed 302,000 claims the previous week and beat analysts' expectations for 310,000 claims."Looking ahead to the July employment report, scheduled to be released on Friday, August 1st, we look for headline and private non-farm payrolls to rise by 225,000 on the month," Barclays Research said.On today's agenda is the July German IFO business climate survey is expected to fall to 109.4."However, following yesterday's PMI readings I imagine most analysts will have raised their expectations for this and I think we're likely to get a comfortable beat here," Alpari Market Analyst Craig Erlam said. "The only question now is how much more has been priced into the markets. I think temporary factors such as the world cup win and the good weather will have played into the stronger PMI readings yesterday and could therefore feed into today's number. It now just remains to be seen whether this can produce a more long term boost to confidence or whether the end of the world cup signalled the end of this brief economic boost."The first estimate of UK gross domestic product (GDP) will also be released today, and is widely anticipated to show growth of 0.8% for the period and 3.1% compared to a year earlier."What's more encouraging is that it's likely to have been driven more by business investment and less by consumer spending, which is extremely important if this is going to be sustainable," Erlam noted. Later on, US June durable goods orders data will be published and is expected to deliver a 0.5% increase in orders. In this morning's company news, Telecoms giant Vodafone posted a 4.4% decline in organic group revenue to £10,204m for the quarter ended June 30th, while group service revenue fell 4.2% to £9,446m, as anticipated. The group faced a more challenging operating environment in Europe, where service revenue declined 7.9%, but said its performance in several markets was beginning to show some signs of stabilisation quarter-on-quarter. Direct Energy, the North American subsidiary of Centrica, has agreed to sell its Ontario home services business to EnerCare for £300m. The group said the deal offered "an attractive opportunity" to realise value from the Canadian home services business. United Utilities on Friday said it had traded in line with its expectations in the four months to late July, with an increase in revenue partly offset by the previously announced special customer discount of around £20m that has been applied to this year's bills. Sainsbury will also be one to watch after market sources yesterday suggested Qataris is poised to make a bid for the supermarket chain at 500p or more per share. NR