4th Aug 2015 06:39
LONDON (Alliance News) - UK stocks are set to open lower Tuesday, carrying on their negative momentum from Monday as falling commodities prices continue to weigh on investor sentiment.
IG says futures indicate the FTSE 100 to open lower at 6,664.5. The index closed down 0.1% 6,688.62 on Monday, snapping a run of four consecutive sessions of gains, as weak Chinese economic data and another slump in commodities prices hit London's heavily-weighted resources sector.
Commodities remain the focal point ahead of the open Tuesday, with Brent oil dropping to a fresh six-month low below the USD50 a barrel mark. After the London close Monday, Brent hit a low of USD49.35 a barrel. US benchmark West Texas Intermediate touched a low of USD45.06 a barrel on Monday.
"Yesterday's sell-off was triggered by the weak PMI readings from China that once again highlighted the challenging conditions in the country and difficulties facing the government and central bank in overcoming it. The recent sell-off in the equity markets in China appears to have created the latest wave of uncertainty for the country although efforts are now being made to prevent such enormous market shocks," says Craig Erlam, senior market analyst at Oanda.
"Weakness in the Chinese economy remains though and against the backdrop of a strengthening dollar environment, commodity prices are likely to remain under a lot of pressure. The decline in prices so far though has been substantial. Brent crude is only around USD4 above its 2015 lows hit in January, while copper ? particularly sensitive to changes in China ? is at a six-year low," Erlam adds.
In Asia on Tuesday, the Nikkei in Tokyo closed down 0.1%, the Hang Seng in Hong Kong trades up 0.3%, and the Shanghai Composite is rebounding, up 3.2%.
On Wall Street Monday, the DJIA closed down 0.5%, and the S&P 500 ended down 0.3%, as did the Nasdaq Composite.
In Greece, the Athens Stock Exchange General Index closed down 16% on Monday, having fallen 23% when the exchange reopened after a break of more than a month. The stock market was closed as part of the capital controls imposed by the Greek government on June 29 to prevent money from fleeing the country and a collapse of the banking system.
The Greek government, which continued talks with international creditors Monday, had imposed certain restrictions on trading. Investors who have money in Greek banks can only buy stocks and shares with funds from outside the country or with cash. Even with the controls, Greeks have withdrawn billions of euros from their accounts over fears of a banking crash
The UK government has sold a 5.4% stake in Royal Bank of Scotland Group, taking the milestone first step on the way to returning the bank to full private ownership six years after its GBP45.5 billion bailout in the global financial crisis.
HM Treasury has sold 630 million ordinary shares at 330 pence each, leaving it with an overall 72.9% stake in RBS. It now controls 51.5% of the voting rights in the bank, compared with 61.3% before the sale. It said late on Monday it had expected to sell about 600 million ordinary shares. RBS shares closed down 1.3% at 337.60 pence on Monday.
In a light economic calendar, there are the UK construction purchasing managers' index at 0930 BST, eurozone producer prices at 1000 BST, US ISM New York Index at 1445 BST, and US factory orders at 1500 BST.
By Neil Thakrar; [email protected]; @NeilThakrar1
Copyright 2015 Alliance News Limited. All Rights Reserved.
By Neil Thakrar; [email protected]; @NeilThakrar1
Copyright 2015 Alliance News Limited. All Rights Reserved.
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