24th Sep 2024 06:59
(Alliance News) - Stocks in London are set to open higher on Tuesday, with news of stimulus measures in China adding impetus in what is shaping up to be a slower day for economic data releases.
Monday saw a slew of flash composite purchasing managers' index readings released. In the UK, the composite PMI declined to 52.9 points in September, from 53.8 in August, but stayed in growth territory.
Over in Europe, the picture was far gloomier, with the latest Hamburg Commercial Bank flash purchasing managers' index fading to a nine-month low of 48.9 points in September.
"A busier-looking data docket awaits today, albeit one that continues to lack top-tier releases," Pepperstone analyst Michael Brown commented.
In the economic calendar on Tuesday look out for the German Ifo business climate report and US consumer confidence data.
IG says futures indicate the FTSE 100 to open up 33.3 points, 0.4%, at 8,293.01. The index of London large-caps closed up 29.72 points, or 0.4%, at 8,259.71 on Monday.
Sterling was quoted at USD1.3358 early Tuesday, flat against USD1.3357 at the London equities close on Monday.
The euro traded at USD1.1115, lower than USD1.1135. Against the yen, the dollar was quoted at JPY144.11 versus JPY143.77.
In Asia on Tuesday, the Nikkei 225 index in Tokyo was up 0.9%. In China, the Shanghai Composite was up 3.6%, while the Hang Seng index in Hong Kong was up 3.6%. The S&P/ASX 200 in Sydney closed down 0.2%.
China on Tuesday unveiled some of its boldest measures in years aimed at boosting its struggling economy as leaders grapple with a prolonged property sector debt crisis, continued deflationary pressure and high youth unemployment.
The world's second-largest economy has yet to achieve a highly anticipated post-pandemic recovery and the government has set a goal of five percent growth in 2024 – an objective analysts say is optimistic given the headwinds it is facing.
On Tuesday, central bank chief Pan Gongsheng told a news conference in Beijing that it would cut a slew of rates in a bid to boost growth, pledging to "promote the expansion of consumption and investment".
Among the moves unveiled Tuesday was a cut to the reserve requirement ratio, which dictates the amount of cash banks must hold in reserve.
The move will inject around a CNY1 trillion, around USD141.7 billion, in "long-term liquidity" into the financial market, Pan said.
Beijing would also "lower the interest rates of existing mortgage loans".
In the US on Monday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.2%, the S&P 500 up 0.3% and the Nasdaq Composite up 0.1%.
On developments across the pond, Pepperstone's Brown said, "The [US Federal Reserve's] larger-than-expected cut last week is set to have boosted consumer confidence. The Conference Board's index is set to have risen to its highest level since February, at 104.0, though key will be whether this improvement in sentiment feeds through into still-resilient consumer spending."
Brown further noted that "remarks are due from Fed Governor Bowman who, last week, was the first board member in almost two decades to dissent, preferring a more modest 25bp cut; clarity on the rationale behind this dissent, and the FOMC's most hawkish member's view on how rapidly rates should return to neutral, will be closely watched".
The Reserve Bank of Australia left interest rates unchanged on Tuesday, believing that it will not see inflation "sustainably" return to target until 2026.
Australia's central bank left its cash rate target at 4.35%, as expected, though defying the likes of the US Federal Reserve and European Central Bank that last week announced rate cuts.
"Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance. But inflation is still some way above the midpoint of the 2–3% target range. In underlying terms, as represented by the trimmed mean, inflation was 3.9% over the year to the June quarter, broadly as forecast in the May statement on monetary policy," the RBA said.
Gold was quoted at USD2,631.61 an ounce early Tuesday, higher than USD2,630.09 on Monday.
Brent oil was trading at USD74.67 a barrel, higher than USD73.80 late Monday.
In Tuesday's corporate calendar, engineer Smiths Group releases full-year results and insurer Direct Line its half-year report.
By Emma Curzon, Alliance News reporter
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