LONDON MARKET EARLY CALL: Stocks To Plunge After US Arrests China Exec

LONDON (Alliance News) - Stocks in London are set for another slide on Thursday as worries over ...

Alliance News 6 December, 2018 | 6:55AM
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LONDON (Alliance News) - Stocks in London are set for another slide on Thursday as worries over US-China trade relations continue to weigh on the minds of traders.

IG says futures indicate the FTSE 100 index of large-caps to open 61.84 points lower at 6,859.90 on Thursday. The FTSE 100 index closed closed down 100.92 points, or 1.4%, at 6,921.84 on Wednesday.

Thus far this week, the blue-chip index is down 0.8% and is currently 10% lower since 2018 began.

"Asian markets and US futures plummeted overnight as news broke that Huawei's CFO had been arrested in Canada to be extradited back to the US. The CFO, Wanzhou Meng, was arrested for allegedly breaching Iran sanctions. China criticized the US and Canada for the arrest, demanding her immediate release. Traders have quickly moved out of riskier assets reflecting nerves that the arrest is likely to escalate tensions between the US and China once again," said Jasper Lawler, head of research at London Capital Group.

The Huawei CFO was arrested in Vancouver, British Columbia, on Saturday, Justice Department spokesman Ian McLeod said. McLeod said a publication ban has been imposed in the case and he could not provide further details.

Huawei issued a statement saying Meng was changing flights in Canada when she was detained "on behalf of the US of America" to face "unspecified charges" in New York.

LCG's Lawler continued: "The timing of the arrest is key here. Markets are already incredibly nervous over slowing economic growth thanks to the inverted US yield curve. Relations between the US and China were supposed to be on the mend after a productive G20. However, the arrest has the potential to shatter very fragile US–Sino relations."

In Asia on Thursday, the Japanese Nikkei 225 index ended down 1.9%. In China, the Shanghai Composite is down 1.7%, while the Hang Seng index in Hong Kong is down 2.8%.

Stocks in the US were closed on Wednesday in honour of former US president George HW Bush, and will re-open on Thursday.

The economic events calendar on Thursday has Germany factory orders at 0700 GMT and US ADP employment data for November, which preludes Friday's closely-watched monthly jobs report, at 1315 GMT.

The UK corporate calendar on Thursday has half-year results from paper and packaging company DS Smith, a trading statement from fashion retailer Ted Baker ,and full-year results from budget hotel operator easyHotel.

In the latest Brexit developments, UK Prime Minister Theresa May has been given a stark warning that her premiership could be ended if she ploughs ahead with her Brexit deal.

The Democratic Unionist Party, which props up May's administration, made clear it would support the government in a confidence motion if the Brexit deal was rejected by MPs on December 11.

But the party's 10 MPs would not back the prime minister if her Brexit deal, including the controversial Northern Ireland backstop measure, survives.

The DUP's position heaps further pressure on May ahead of the crunch vote on the Withdrawal Agreement and Political Declaration thrashed out after months of negotiations in Brussels.

Labour has indicated it will table a motion of no confidence in the prime minister in the wake of a defeat on such a pivotal issue for May.

By Lucy Heming;

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