5th Jul 2018 06:57
LONDON (Alliance News) - Stocks in London are called for a slightly lower open on Thursday, with investors continuing to err on the side of caution as the US and China look set to proceed with reciprocal tariffs on Friday.
IG says futures indicate the FTSE 100 index of large-caps to open 5.69 points lower at 7,567.40 on Thursday. The FTSE 100 index closed down 0.3%, or 20.20 points, at 7,573.09 on Wednesday.
Markets are pointing to a "lower but uninspiring open" on Thursday, said Jasper Lawler, head of research at London Capital Group. Reciprocal tariffs from the US and China on the other's goods are due to come in on Friday.
"With the continued uncertainty as to what the actual next move will be, from either power, traders were opting to sit on the side lines," said Lawler.
Chancellor Angela Merkel said she will make "every effort" to avoid a trade war with the US and repeated her pledge to increase defence spending, addressing two major points of contention in the US-German relationship.
Speaking in the German parliament on Wednesday, Merkel said "it is worth making every effort to try to deescalate this conflict so that it does not become an all-out war ... Germany is definitely committed to it as is the entire EU."
But, speaking at an economics event organized by the Munich-based Ifo institute, EU commissioner Guenther Oettinger predicted: "There will be a trade war."
In the UK, Theresa May faced fresh warnings and pressure over the shape and content of the final Brexit deal as crunch cabinet talks at Chequers loom.
With little more than a day to go before senior ministers meet in Buckinghamshire to thrash out a white paper, ministers are said to be sceptical about the so-called "third way" to solve the customs issue on the Irish border.
The proposed "facilitated customs arrangement" would see technology used to determine where goods arriving into the UK will ultimately end up. This would allow the correct tariff to be paid – either at the UK or EU rate.
According to the Financial Times, Brussels will express concern about the reliance of this plan on untested technology and will question how it is not "an open invitation to smugglers".
Meanwhile, Jaguar Land Rover warned that a "bad" deal on Brexit could cost it GBP1.2 billion every year. It follows similar warnings in recent weeks from Airbus and BMW who have voiced concerns about the impact of a no-deal Brexit on UK jobs and investment.
Elsewhere, the European Commission said it has opened an in-depth investigation to assess whether marketing agreements concluded between the Association for the Promotion of Touristic and Economic Flows and Ryanair at the airport of Montpellier in France are in line with EU State aid rules.
Montpellier airport is a regional airport located in the French region of Occitanie. The airport is one of the twenty largest in France and served 1.9 million passengers in 2017.
The Commission received a complaint concerning marketing agreements between the Association for the Promotion of Touristic and Economic Flows and Ryanair and its subsidiary AMS. The complainant alleged that the agreements amounted to illegal State aid in favour of Ryanair.
In Asia on Thursday, the Japanese Nikkei 225 index is down 0.8%. In China, the Shanghai Composite is down 0.9%, while the Hang Seng index in Hong Kong is down 1.2%.
Markets in the US were closed on Wednesday for the Independence Day holiday, and re-open on Thursday.
In Thursday's corporate calendar, Primark-owner Associated British Foods, electronic products distributor Electrocomponents, and housebuilders Bovis Homes and Persimmon all release trading updates. Fashion retailer Superdry and online estate agent Purplebricks release annual results.
In the economic calendar on Thursday, German factory orders are at 0700 BST, while in the US there is ADP employment change at 1315 BST followed by initial and continuing jobless claims at 1330 BST. The Markit composite PMI is at 1445 BST, with the ISM non-manufacturing PMI at 1500 BST.
In the central bank events calendar on Thursday, Bank of England Governor Mark Carney will speak at 1100 BST while in the US, the minutes from the latest Federal Open Market Committee will be released at 1900 BST.
"The June FOMC Minutes should shed some light on the Fed's level of conviction behind a fourth rate hike later this year. We will also watch for the Fed's assessment of various risks to the outlook, especially on the trade front, as well as officials' views on underlying inflation," said analysts at Societe Generale.
Related Shares:
RYA.L