Growth concerns and debt talks set to lower opening

IT’S difficult to see any way but down for shares this morning. There’s always the potential for the US debt impasse to be overcome and an agreement on the debt ceiling to be reached any minute, but without that there is just too much uncertainty around.

GFT quotes two-way prices on stock indices around the clock, even when the underlying markets are closed. The FTSE 100 index is called to open down 20 points at 5,795. The German DAX is forecast to open down 22 points at 7,136, and the French CAC 40 is quoted to down 12 points at 3,659.

Aside from all the political sparring in the States, the main concern playing on traders’ minds is economic growth.

Last week’s GDP figures for the UK and US painted a bleak picture. US second quarter growth was disappointing, coming in at 1.3 per cent on an annualised basis versus 1.8 per cent forecasts.

Even more disconcerting was the revision to the first quarter number: down from 1.9 per cent to a staggering 0.4 per cent.

In the UK, the economy grew by just 0.2 per cent in the second quarter, down from 0.5 per cent.

With this backdrop, traders are also unlikely to commit too much ahead of the non-farm payrolls out on Friday, which have the potential to be one of the biggest – i.e. most volatile– jobs numbers we have seen for some time. The previous data for June showed only 18,000 jobs were created. For July the expectations are for around 90,000.

The corporate earnings season has been largely overshadowed by the ongoing events in Capitol Hill, but this week a whole host of UK blue chips will release interim results, beginning with HSBC this morning.

The headline grabber here will surely be the rumoured job cuts which are expected as part of a global cost-cutting drive: between 10,000 and 15,000 are expected to face the chop during the next year.

Barclays, Lloyds and RBS also release their numbers later in the week, and disappointing numbers are forecast for all.

Martin Slaney is head of global dealing operations for GFT.