2nd Oct 2014 06:27
LONDON (Alliance News) - UK stocks are set to open lower Thursday following heavy falls by equities markets in the US and Asia, as protests in Hong Kong continued overnight and as European market attention turns to the latest European Central Bank policy decision later in the day.
Futures indicate that the FTSE 100 will open 12 points lower at 6,545.
The UK's leading index recorded its lowest close in more than six months on Wednesday as stocks around Europe started the fourth quarter on the back foot, amid some disappointing manufacturing PMI data. UK manufacturing activity fell to its lowest level since May last year, with companies reporting weak demand from Europe. In Germany, the traditional manufacturing powerhouse of the single-currency block, manufacturing activity actually contracted in September for the first time in over a year.
US stocks went on to suffer heavy losses, with the DJIA shedding more than 200 points, or 1.4%, while the S&P 500 dropped 1.3%, and the Nasdaq Composite closed 1.6% lower.
In Asia, the Shanghai and Hong Kong markets remain closed for China's National Day, while Tokyo's Nikkei 225 suffered a relatively massive 2.6% fall.
Pro-democracy protesters continue to occupy the streets of central Hong Kong. Student leaders have said Hong Kong Chief Executive Leung Chung-ying must resign by Thursday or they will occupy important government buildings. Activists are demanding reforms ahead of the 2017 elections, including open nominations of candidates for the next chief executive. Meanwhile, Chinese authorities have warned of "unimaginable consequence" if the protests continue, creating a stand-off that is hurting the Asia stock markets.
The losses look set to continue into the European session again Thursday as investors await the latest policy decision from the ECB. Wednesday's disappointing eurozone data only served to pile more pressure on ECB President Mario Draghi ahead of the 1245 BST announcement and subsequent 1330 BST press conference.
Most commentators are expecting the central bank to keep rates on hold, but Draghi is expected to deliver more detail on the recently announced asset-backed-security purchase programme, with investors keen to hear about the size and composition of the packaged products.
"Press reports have suggested that ABS purchases could top EUR500 billion, and anything less than that could be deemed a disappointment at this point," said Forex.com Research Director Kathleen Brooks.
The US brings its own bond-buying programme to an end this month, leaving a nervousness in the market about whether the global economy has recovered to a level that can support itself without the central bank's liquidity prop.
"The concern is whatever the ECB does won't be anywhere near enough to fill the gap left by the US central bank, against an uncertain geopolitical back drop and a slowing world economy," said CMC Markets chief market analyst Michael Hewson.
From the UK corporate calendar Thursday, TUI travel has narrowed its profit guidance towards the top end of the previous range, now expecting full-year underlying operating profit to be up at least 9%, compared to the 7% to 10% it had previously guided.
Construction group Carillion has released a third quarter statement to say it is trading in line with expectations, while Domino's Pizza has said its UK like-for-like sales growth in the 13 weeks to September 28 was up 13%, compared to 4% growth a year earlier.
Virgin Money, the banking arm of Richard Branson's Virgin group, is reportedly set to unveil plans for a stock market listing in London.
From the US Thursday, initial and continued jobless claims data, due at 1330 BST, will provide a warm-up for Friday's non-farm payroll report, while US factory orders data for August is also due at 1500 BST.
By Jon Darby; [email protected]; @jondarby100
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