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London open: Stocks fall ahead of Eurozone CPI
London stocks were in the red on Friday as investors continued to digest a worse-than-forecast slowdown in US economic growth in the third quarter and looked ahead to Eurozone inflation figures.
US gross domestic product rose an annualised 1.5% in the third quarter, down from the previous quarter’s 3.9% and compared to analysts’ expectations of 1.6%. However, many analysts said it was unlikely to persuade the Federal Reserve’s next move on policy. The Fed on Wednesday decided to keep interest rates unchanged but left the door open to a December rate hike.
Turning to Friday’s agenda, the Eurozone consumer price index at 1000 GMT is expected to show 0% year-on-year growth in October, up from a 0.1% fall the previous month.
Inflation remains well below the European Central Bank’s target of just below 2%, which has prompted President Mario Draghi to say the governing council will re-examine its €60bn monthly asset purchase programme at December’s policy meeting and consider extending it past September 2016.
The Eurozone unemployment rate is also due at 1000 GMT, with analysts predicting it will remain at 11% in September.
On home soil, GfK’s consumer confidence index fell to 2 in October from 4 in September, missing expectations for a reading of 3.
“While consumer confidence remains elevated in light of improved real wage growth, it appears that consumers are starting to feel less confident about the future owing to global economic worries, with anecdotal evidence from the GfK press release suggesting that ‘good news on the domestic front is being tempered by concerns about our ability to shrug off the global downturn’,” said Barclays Research. “This may be weighed on further as the impact of fiscal austerity is felt and inflation picks up at the start of 2016.”
Stateside, personal spending and income figures are due in afternoon trade along with the University of Michigan’s final estimate on consumer confidence and the Chicago purchasing managers’ index on manufacturing.
On the company front, Royal Bank of Scotland declined after reporting a drop in pre-tax profit in the third quarter to o £295m from £3.2bn the previous year due to higher restructuring costs.
International Consolidated Airlines flew lower despite reporting a jump in third quarter profit.
Pets at Home slumped as it reported an increase in first half sales but revealed weakness in the health and hygiene business.
Moneysupermarket.com dropped after saying it expects a slowdown in revenues in the fourth quarter.
