LONDON MARKET EARLY CALL: Flat Call As Virus, US-China Concerns Remain

(Alliance News) - Stock prices in London were pointed towards a muted open Friday, as fears of a ...

Alliance News 19 June, 2020 | 7:00AM
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(Alliance News) - Stock prices in London were pointed towards a muted open Friday, as fears of a second wave of coronaviruses cases and another verbal blow-up between the US and China continue to weigh heavily on investor's minds.

IG says futures indicate the FTSE 100 index of large-caps to open 2.27 points down at 6,221.80 on Friday. The blue chip index closed down 29.18 points, or 0.5%, at 6,224.07 on Thursday. So far this week, the FTSE 100 is up 1.9%.

"Health concerns were doing the rounds yesterday and European equity markets lost a little ground," CMC Markets analyst David Madden commented. "Recently there have been fears that the reopening of economies has brought about a rise in new Covid-19 cases, and that theme has dominated the past week. It was reported the lockdown conditions in Beijing are getting worse. In addition to that, US states such as Arizona, Florida and Texas registered a rise in the number of new cases. Even though it appears the health crisis is a bigger issue in the US than it is in Europe, the S&P 500 finished the session essentially unchanged on the day."

Wall Street ended mixed on Thursday, with the Dow Jones Industrial Average ending down 0.2%, but the S&P 500 added 0.1% and Nasdaq Composite closed 0.3% higher.

Another 1.5 million US workers filed for unemployment benefits last week, the Labor Department said, bringing the number of people laid off, at least temporarily, by Covid-19 to 45.7 million. The entire population of the US is about 330 million.

Sentiment also was dented by data showing increased cases in Florida, Texas and other states as well as isolated instances in which hospitals are near full capacity.

In Asia on Friday, the Japanese Nikkei 225 index is up 0.4%. In China, the Shanghai Composite is up 0.7%, while the Hang Seng index in Hong Kong is marginally lower.

US President Donald Trump warned Thursday that "complete decoupling" between the deeply intertwined US and Chinese economies remains a potential policy.

"The US certainly does maintain a policy option, under various conditions, of a complete decoupling from China. Thank you!" Trump tweeted.

He wrote that he was responding to comments by his trade representative Robert Lighthizer, who has been at the forefront of trade war negotiations with Beijing.

On Wednesday, Lighthizer told a congressional committee that China was so far living up to the terms of an agreement easing the dispute and that decoupling the two economic giants was now impossible.

Sterling was quoted at USD1.2440 early Friday, firmer than USD1.2421 at the London equities close on Thursday.

The Bank of England upped its quantitative easing programme by GBP100 billion on Thursday, as widely anticipated by markets, in a less-dovish-than-expected meeting.

The nine-strong Monetary Policy Committee was unanimous in keeping the Bank Rate at 0.1%, but there was one dissenter on the move to increase the total stock of asset purchases to GBP745 billion. Andrew Haldane preferred to maintain the target at GBP645 billion, the BoE minutes showed.

Lloyds Bank pointed to Haldane's dissent as an indication that the MPC is "less downbeat" about the UK's near-term prospects.

The euro traded at USD1.1212 early Friday, softer than USD1.1220 late Thursday. Against the yen, the dollar was quoted at JPY106.80, up from JPY106.77 a day before.

In commodities, Brent oil was trading at USD41.87 a barrel early Friday, up versus USD41.20 late Thursday. Gold traded at USD1,727.00 an ounce early Friday, higher than USD1,721.16 on Thursday.

The economic events calendar on Friday has UK retail sales figures and Germany producer prices at 0700 BST.

The UK corporate calendar has annual results from currency manager Record and a trading statement from oilfield services firm John Wood.

By Paul McGowan; paulmcgowan@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

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