International Markets: London - UK watches Asia

UK STOCKS are likely to be mixed this week as concern that Asia's turmoil may undermine profits for some companies offsets optimism that interest rates are unlikely to rise soon. Bonds are expected to be little changed, as economic reports are not expected to provide clues about the future of interest rates.

Marks and Spencer and Zen- eca Group will make statements on current trading, while WH Smith releases first-half results including the Christmas season.

The FT-SE 100 index fell 1.55 per cent on the week to 5,181.4. The FT- SE Oil Integrated index led the decline, down 7.4 per cent on the week as oil prices appear to be headed even lower. London crude fell 3.1 per cent to $14.78 on Thursday, its lowest level since April 1994. Prices have fallen 25 per cent in the three months amid fears that lower Asian demand, higher production and further oil sales will result in a glut of crude.

Music group EMI said on Friday that its annual operating profit will miss expectations by up to pounds 25m because of setbacks in the slowing economies of the Asia-Pacific region. Investors will be watching for other evidence of the effect of Asian economic turmoil. US equities have slipped on Asia's decline, as some companies reported lower-than-expected earnings. This, coupled with the misconduct allegations against President Bill Clinton, could drag down US stocks and pull UK shares down in their wake.

Marks and Spencer's Wednesday statement could show a lower-than-expected increase in sales, particularly over Christmas.

Last week's retail sales report, which showed that sales at stores and supermarkets unexpectedly fell 0.1 per cent in December, dashed hopes that holiday shopping had begun slowly and then surged. The drop makes it less likely that interest rates will be raised next month.

Evidence that the British economy is growing sustainably, and that a series of interest-rate rises will not be needed, failed to boost stocks. Economic figures due out next week include M4, Britain's broadest measure of money supply, an industrial trends survey, international trade figures and a consumer credit report.

Wednesday sees the auction of pounds 2bn of new 30-year gilts. The benchmark 10-year government bond yield rose 1 basis point to 6.06 per cent on Friday. The yield on the March short sterling futures contract - a measure of UK interest rate expectations - fell 6 basis points to 7.44 per cent, suggesting investors think official interest rates have peaked.

However, despite this leading indicator, together with economic data making an increase next month less likely, some analysts are not yet confident that the top of the interest-rate cycle has been reached.

"The jury is still out on rates," says Tony Turner, an investment manager with Norwich Union. "We're either at or very near the peak. It's a very fine decision."

Copyright: IOS & Bloomberg

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there