FTSE 100 set for a soft start ahead of retail sales and flash PMIs

Stocks in London are expected to open modestly lower ahead of retail sales data and a blast of purchasing managers’ indices (PMI) releases. Spread betting quotes indicate the FTSE 100 will open 27 points lower at 6,911. The wheels came off the equity bandwagon yesterday in the US after it was reported that the Biden administration is looking to increase the rate of capital gains tax to 39.6% for those Americans earning US$1mln or more per year. “While one could argue that the prospect of higher taxes is never welcome, and a doubling of a key tax rate even more so, the likelihood of anything of this nature passing through an evenly split Congress, lies somewhere between slim and none, however in these highly uncertainty times it doesn’t take much to spook a little bit of profit-taking, in what has already been a very choppy week. The reality is taxes may rise but certainly not by as much being touted,” suggested CMC’s Michael Hewson. The Dow Jones industrial average tumbled 321 points to 33,816 while the S&P 500 shed 38 points at 4,135. In Asia this morning, markets are mixed. Japan’s Nikkei 225 is on-trend, sporting red with a 226 point fall at 28,962 but in Hong Kong, the Hang Seng is on the rise, up 259 points at 29,014. In the UK, retail sales data for March will make for interesting reading as the year-ago data starts to include data from lockdown periods. Market expectations are for retail sales (including petrol) in March to show a 1.5% increase month-on-month after rising 2.1% in February. Year-on-year, that would equate to a 3.5% increase compared to February 3.7% decline. With petrol excluded from the equation, the monthly rise is tipped to be 2.0%, compared to February’s 2.4% hike, while the year-on-year gain is expected to be 4.5%, compared to a 1.1% decline in February. As for the flash PMIs, these are expected to report an acceleration in growth this month, according to Daiwa Capital Markets, with the composite PMI likely to rise about 2pts from March’s six-month high of 56.5, “thanks not least to improvement in the services sector.” The consensus forecast is for a reading of 58.0. Numbers on UK public finances are also scheduled for release. “We look for a ‘PSNB. ex.’ figure of £18.5bn in March. Bar revisions, this would imply a full-year deficit of £297bn, well below the OBR's £327bn forecast,” said Samuel Tombs at Pantheon Macroeconomic. The consensus forecast is for £21.3bn. Around the markets Sterling: US$1.3862, up 0.23 cents 10-year gilt: 0.741%, - 0.33 basis points Gold: US$1,785.30 an ounce, up US$3.30 Brent crude: US$65.82 a barrel, up 42 cents Bitcoin: US$49,024 a barrel, down US$2,819