5th Dec 2018 06:58
LONDON (Alliance News) - Stocks in London are set to open sharply lower on Wednesday following a slump in New York overnight that was tracked by Asian markets, with the optimism seen at the start of the week fading.
IG says futures indicate the FTSE 100 index of large-caps to open 59.56 points lower at 6,963.20 on Wednesday. The FTSE 100 closed down 39.65 points, or 0.6%, at 7,022.76 on Tuesday.
"Monday's stock market relief rally rather surprisingly ran out of legs fairly quickly yesterday, with some blaming the differences over the detail between the US version of what transpired at the weekend and the lack of any detail from the Chinese side with which to confirm it," said CMC Markets chief market analyst Michael Hewson.
He added: "This weakness strikes me as being overdone, particularly when you look at recent US data, however along with concerns about slowing global growth in China and Europe, along with rising geopolitical risk in Europe as well as last night's events in the UK parliament, its perhaps not surprising that investor nerves are a little frayed."
In the US on Tuesday, Wall Street ended deep in the red, with the Dow Jones Industrial Average tumbling 3.1%, the S&P 500 3.2% and the Nasdaq Composite 3.8%.
In Asia on Wednesday, the Japanese Nikkei 225 index ended down 0.5%. In China, the Shanghai Composite is down 0.5%, while the Hang Seng index in Hong Kong is 1.7% lower.
The declines came despite positive economic data from China.
The services sector in China continued to expand in November, and at a faster-than-expected pace, data showed. The latest survey from Caixin showed a PMI score of 53.8, beating expectations for the reading to be unchanged from October's 50.8.
The reading for November continued to rise further above the 50-mark, which indicates expansion in the sector. Individually, November marked the steepest increase in services activity in five months, while manufacturing production remained stable.
Japan's services PMI for November also remained above the 50-line but weakened from October. The services reading of 52.3 was down marginally from 52.4 in October. Individually, business activity continued to grow at a solid rate as demand conditions remained supportive. Confidence strengthened to a 10-month peak.
Shareholders of Japan's Takeda Pharmaceutical Co approved the proposed acquisition of Irish drugmaker Shire.
The acquisition remains subject to approval by Shire shareholders at a meeting to be held later on Wednesday. It is expected that completion of the acquisition will take place on January 8. The last day of dealings for Shire shares on the London Stock Exchange will be Friday, January 4. Shire will be removed from the FTSE 100 index on Monday, January 7, according to index provider FTSE Russell.
To come in the economic calendar on Wednesday, there are services PMIs from France, Germany, the eurozone and the UK at 0850 GMT, 0855 GMT, 0900 GMT and 0930 GMT respectively. There are also eurozone retail sales at 1000 GMT.
Markets in the US will be closed on Wednesday in light of the death of former US President George HW Bush.
In the UK, Theresa May is battling to keep her Brexit agenda on track as MPs are again set to clash over the UK prime minister's EU withdrawal plan after inflicting major defeats on the government.
As the Commons prepares for a second of five days of debate on May's controversial Brexit deal on Wednesday, a Tory former chief whip broke ranks and said he would vote against the proposals.
Mark Harper, who backed Remain in the referendum, insisted the EU agreement would leave the UK worse off. Forecasting that May would lose the crunch Brexit vote next Tuesday by more than 80 votes, Harper urged the PM to renegotiate the deal.
The comments came in the wake of a humiliating set of Commons defeats for May which saw the government forced to allow MPs to have a say in what happens next if the Brexit deal is voted down next week.
Ministers also had to agree to publish the "final and full" legal advice to Cabinet on the withdrawal agreement as the government was found to be in contempt of Parliament for not already doing so.
In the UK corporate calendar, there are half-year results from transport operator Stagecoach Group, annual results from stockbroker Numis and alcohol producer Stock Spirits, and a trading statement from clothing retailer Joules.
Related Shares:
Shire