Thursday May 8, 07:12 AM
Euroshares outlook - lower after Wall St decline, ECB and BoE in focus
LONDON (Thomson Financial) - Europe's leading exchanges are headed for a lower open this morning following a sharp decline on Wall Street overnight on the back of soaring oil prices, while European investors are expected to focus on today's interest-rate setting decisions by the European Central Bank and the Bank of England.
On the other side of the Atlantic, Wall Street tumbled as the price of oil soared towards $124 per barrel and touched off concerns that the stock market's recent gains might have been premature as consumers grapple with rising energy and food costs.
While stocks pulled back, the day was not without good news. The U.S. Labor Department said labour costs rose at an annual rate of 2.2 percent during the first quarter.
The DJIA ended the day 206.48 points or 1.59 percent lower at 12,814.35, while the S&P 500 closed down 25.69 points or 1.81 percent at 1,392.57. The tech-laden Nasdaq (NASDAQ: news) was down 44.82 points or 1.80 percent at 2,438.49.
Asian markets largely tracked Wall Street, with the Nikkei 225 (news) losing 123.54 points or 0.9 percent to 13,978.94, while the Hang Seng (news) fell 185.31 points or 0.72 percent to 25,424.90.
World (WRGR.TA - news) oil prices struck a fresh intra-day record of $123.87 a barrel in Asian hours on Thursday despite a bigger-than-expected rise in U.S. energy stocks.
Gold prices dipped Wednesday, as the stronger dollar reduced the precious metal's appeal as an alternative investment, and as oil prices eased. Other precious metals also eased.
Back in Europe, the interest-rate setting decisions by the European Central Bank and the Bank of England will be in focus today.
'We are expecting it to be a slow morning as all eyes will be on the BOE and then later the EU central bank rate cut announcements. While no cut is expected, traders will be watching the language of the announcement for clues of what the bank is thinking of doing next,' David Evans, market analyst at BetOnMarkets.com said.
Turning to corporate news, earnings season continues in full swing.
Deutsche Telekom (Xetra: 555750 - news) beat expectations with its first quarter earnings report, saying adjusted net profit for the first quarter rose 33.2 percent year on year to 750 million euros, boosted by cost-cutting initiatives as mobile subscriber growth was offset by declines in its fixed-line business.
Staying in Germany, Munich Re is in the spotlight as it missed the consensus with its first quarter report.
The reinsurance giant said first quarter net profit came to 775 million euros, below the 801 million consensus figure.
Meanwhile, Belgian brewer Inbev (Brussels: INB.BR - news) is headed for a lower start to the day after posting an unexpected drop in first quarter net profit.
The group said net came to 249.0 million euros from 280 million, well below the 320-330 million euros seen by analysts.
Also among today' likely fallers, Dutch banking midcap Van Lanschot (Amsterdam: LANS.AS - news) just issued a profit warning for the full year.
And in France, Vallourec (Paris: FR0000120354 - news) last night reported lower than expected first quarter sales, operating profit with high raw material costs weighing on margins.
The new is likely to weigh on competitor Salzgitter this morning.
Other companies reporting today include Unicredit (Milan: UCG.MI - news) , Unilever (LSE: ULVR.L - news) , Lonmin (LSE: LMI.L - news) , Norske Skog and Demag Cranes (Xetra: DCAG01 - news) .
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