21st Aug 2015 06:01
LONDON (Alliance News) - UK stocks are set to open heavily lower on Friday after poor Chinese manufacturing data showed further signs of weakness in the world's second largest economy, while Greece prepares itself for snap elections in September.
The manufacturing sector in China continued to struggle in August as the contraction accelerated, a preliminary survey from Caixin showed, with a purchasing managers' index score of 47.1, which is down from 47.8 in July and missed expectations of a slight fall to 47.7. It also moves further beneath the line of 50 that separates expansion from contraction.
"The Caixin Flash China General Manufacturing PMI for August has fallen further from July's two-year low, indicating that the economy is still in the process of bottoming out. But overall, the likelihood of a systemic risk remains under control and the structure of the economy is still improving," said He Fan, chief economist at Caixin Insight Group.
In Asia Friday, stocks continue to slide, with the Japanese Nikkei down 2.7%, the Hang Seng down 2.2%, and the Shanghai Composite off 2.9%.
IG says futures indicate the FTSE 100 to open 112.09 points lower at 6,255.8. The index ended down 0.6% at 6,367.89 Thursday following another heavy fall in Chinese stock markets, while disappointing US initial jobless claims data provided another suggestion the Federal Reserve may push back a US interest rate hike.
Wall Street also closed lower Thursday. The DJIA and the S&P 500 both ended down 2.1% and the Nasdaq Composite closed down 2.8%.
Greek Prime Minister Alexis Tsipras tendered his resignation on Thursday, paving the way for snap elections next month. Tsipras, who was elected only in January on pledge to renegotiate austerity measures, said he felt "a moral obligation to place this deal in front of the people, to allow them to judge...both what I have achieved, and my mistakes".
The election date is yet to be set, but government officials said the aim was to hold the election on September 20.
Oil prices remain under pressure Friday. US benchmark West Texas Intermediate continues to trade near six-and-a-half year lows at USD40.75 a barrel, while Brent oil remains near seven-month lows at USD45.98 a barrel.
In the UK corporate calendar, there are interim results from cable management services company HellermannTyton Group, property investor Tritax Big Box REIT and private equity firm HgCapital Trust.
In the economic calendar there is German Gfk consumer confidence survey at 0700 BST before French, German and eurozone manufacturing PMIs at 0800 BST, 0830 BST and 0900 BST, respectively. UK public sector net borrowing is due at 0930 BST. In the US, Markit manufacturing PMI is due at 1445 BST.
By Neil Thakrar; [email protected]; @NeilThakrar1
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