LONDON (Alliance News) - London share prices are set to open flat Wednesday, as investors keep watching closely the negotiations between Greece and its European creditors, with Purchase Manager's Index readings from Asia, Europe and the US also in focus.
The European Central Bank is due to announce at 1245 BST its latest policy decision, with analysts expecting no change in rates or quantitative easing.
IG says futures indicate the FTSE 100 to open 2 point lower at 6,926.27. The index closed down 0.4% at 6,928.27 Tuesday, due to the continued uncertainty over the Greek debt negotiation, despite a strong performance from the mining sector.
"The new deal is expected to be presented today, but given it appears little different in tone or red lines, it seems unlikely that after all these weeks and months of toing and froing between Athens and Brussels that any agreement will be forthcoming," says Michael Hewson, chief market analyst at CMC Markets UK.
A draft agreement between Greece and its international creditors to unlock much-needed cash in exchange for tough reforms by Athens is close to being completed, officials said Tuesday. The last details of the proposed debt deal are being intensively negotiated, eurozone officials said.
Greece is due to make a repayment of EUR300 million to the International Monetary Fund on Friday. However, whether a deal between Athens and its creditors - its eurozone partners and the IMF - can be hammered by the end of the week remains open.
Meanwhile, Eurogroup Chairman Jeroen Dijsselbloem said Tuesday it is "not even theoretically possible" for Greece's lenders to resume support this week while discussions on its economic reforms are ongoing, Reuters reported.
The ECB policy decision Wednesday follows eurozone inflation figures on Tuesday.
"Eurozone bond yields rose yesterday after inflation data showed prices rising faster than expected at 0.3% in May, while the core reading was 0.9%," says Oanda analyst Craig Erlam. "While this is unlikely to even prompt a discussion among the ECB about tapering its QE program earlier than September next year, it will invite many questions and could be the cause of significant volatility today, particularly in bond markets."
In Asia on Wednesday, the Japanese Nikkei 225 closed down 0.3%, as the Hang Seng trades up 1.0% and the Shanghai Composite is flat.
The services sector in China grew at a faster rate in May, the latest report from HSBC Bank showed on Wednesday, with a PMI score of 53.5. The reading came in above the 52.9 of April.
Meanwhile, the services sector in Japan advanced at an accelerated pace in May, the survey from Markit Economics showed, with a PMI score of 51.5. The figure was up from 51.3 in April, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. The composite index came in at 51.6, up from 50.7 in April.
Wall Street also ended lower Tuesday. The DJIA closed down 0.2%, while the S&P 500 and the Nasdaq Composite both ended down 0.1%.
In the UK, Dixons Carphone reported growth in like-for-like sales in both the fourth quarter of its financial year and in its full year, and said it expects pro-forma headline pretax profit for the year to exceed the top end of its guidance. The FTSE 100 electricals and telecoms retailer said in a trading update that like-for-like revenue in the 17 weeks to May 2 was up 9% and up 6% for the full year to the same date.
WH Smith reported a rise in total sales in the 13 weeks to May 30, although it said that like-for-like revenue was flat, as its Travel business outperformed the High Street business.
The books and stationery retailer said that total group sales in the 13 weeks were up 1% compared to the same period the year before, but like-for-like revenue remained flat year-on-year.
Meanwhile, TUI Group joint Chief Executive Peter Long is set to become chairman of the travel and cruise operator and the chairman of Royal Mail after the postal operator said he will succeed Donald Brydon as its chair on September 1. Royal Mail said Long will join its board as a non-executive director and chairman designate on June 18, and will stand for election at its annual general meeting on July 23. He will then succeed current chairman Brydon at the start of September.
Interserve said its CI-ONE Construction joint venture with China State Construction Engineering Corp has been named as the preferred bidder by Chinese property developer Dalian Wanda for the GBP550 million One Nine Elms scheme in Battersea in south London. The pair will handle the construction of the project, which will comprise high-end residential, hotel and retail space, including a new embassy for the US, the regeneration of Battersea Power Station and a new business district.
The FTSE Committee will announce Wednesday its index review decision based Tuesday's closing prices. Aerospace and defence company Meggitt is likely to drop out of the FTSE 100 after a volatile March and a weak share performance in April and May, while satellite communications service provider Inmarsat is set to return to the blue-chip index following a strong run in its shares since the previous index review.
Often, the likely moves become apparent in the days ahead of the index review. However, this time the changes to the FTSE 100, outside of Inmarsat and Meggitt, are too close to call. Wm Morrison Supermarkets, Sports Direct International and Aggreko are amongst the other potential candidates for demotion from the FTSE 100.
In the economic calendar, Markit Services PMI readings from Italy are due at 0845 BST, with readings from Germany, the eurozone and the UK due at 0855 BST and 0900 BST and 0930 BST, respectively. Eurozone's retail sales are due at 1000 BST. In the US, Markit Services and Composite PMI is at 1445 BST, while EIA crude oil stocks are due at 1530 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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