Stocks lower over Australasian weakness

Equities are in the red this morning as they take their cue from overnight activity in Japan and Australia.

The Japanese market lost 3.8% last night, as the wave of profit-taking continues. The Nikkei lost a large portion of the gains made over the past six months as traders made the decision to lock in profits.

Australia revealed a 0.6% rise in gross domestic product (GDP) for the first quarter of 2013, compared with the previous three months, when analysts were expecting a reading of 0.8%. The slowdown in the Australian economy is no surprise as it is interlinked with China. This marginal growth rate dragged Australian stocks 1% lower.

The latest eurozone services purchasing managers index (PMI) for May came in worse-than-expected at 47.2, and since any reading below 50 indicates that the sector has shrunk this weighed on investor confidence.

Tesco announced a 2.7% decline in group sales for the quarter. A poor performance in Europe dragged on the overall business, and the share price is 4% lower so far this morning.

At 1.15pm (London time), the latet US ADP employment change is released. Economists are expecting an increase of 171,000, but if the report is better-than-expected we might see US stock futures rally.

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