LONDON MARKET EARLY CALL: Downbeat Start On 2nd Wave Fears; HSBC Falls

(Alliance News) - Stocks in London are set to open lower on Monday as worries over a second wave ...

Alliance News 21 September, 2020 | 6:57AM
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(Alliance News) - Stocks in London are set to open lower on Monday as worries over a second wave of Covid-19 infections grip markets.

Meanwhile, HSBC shares were down 3.7% in Hong Kong after two negative press reports.

IG says futures indicate the FTSE 100 index of large-caps to open 44.75 points lower at 5,962.30 in London on Monday. The blue-chip index closed down 42.87 points, or 0.7%, at 6,007.05 on Friday.

"As we look to a new week, with investors absorbing the recent statements from central banks, and the prospect that further stimulus may not come immediately, concerns are rising that the summer recovery is probably as good as it gets when it comes to the recent rebound in economic activity," said Michael Hewson, chief market analyst at CMC Markets.

Hewson said: "This reality combined with the growing realisation that a vaccine remains many months away, despite President Trump's claims to the contrary, has made investors increasingly nervous, as we head into an autumn that could see lockdowns reimposed."

The UK government has refused to rule out a second lockdown as the country grapples with a resurgence in infections.

In a televised briefing on Monday, Chris Whitty, the chief medical officer for England, will say the country faces a "very challenging winter", with the current trend heading in "the wrong direction".

UK Prime Minister Boris Johnson spent the weekend with senior ministers and advisers discussing what action to take as the rise in the number of new cases showed no sign of slowing. It is thought Johnson could announce new measures in a press conference as early as Tuesday.

Ministers were reported to be split on how far any new restrictions should go, with UK Chancellor Rishi Sunak said to be resisting controls which could further damage the economy. During a series of broadcast interviews over the weekend, however, Health Secretary Matt Hancock refused to rule out a second national lockdown in England, if people fail to follow the social distancing rules.

Among the measures being considered by ministers is a temporary two-week "circuit break", with tighter restrictions across England in an attempt to break the chain of transmission.

Sterling was quoted at USD1.2954 early Monday, firm on USD1.2949 at the London equities close on Friday.

The euro traded at USD1.1865 early Monday, only marginally up from USD1.1863 late Friday. Against the yen, the dollar edged down to JPY104.32 versus JPY104.41.

In the US on Friday, Wall Street ended in the red, with the Dow Jones Industrial Average ending down 0.9%, the S&P 500 down 1.1% and Nasdaq Composite also shedding 1.1%.

In China, the Shanghai Composite is down 0.6%, while the Hang Seng index in Hong Kong is down 1.4%.

TikTok Global plans to hold a public listing, its Chinese parent company ByteDance said Monday, after announcing a deal over the weekend that would avert a shutdown of the popular app in the US.

The agreement, which has been approved by Donald Trump, sees Silicon Valley giant Oracle become the data partner for the video-sharing platform while Walmart becomes a commercial partner, creating a new US company called TikTok Global.

On Monday, ByteDance said in a statement on social media that TikTok Global plans to launch a "small round of pre-IPO financing", after which it would become an 80%-owned subsidiary of ByteDance. The company added that the board of directors of TikTok Global includes ByteDance founder Zhang Yiming, along with its current directors and the CEO of Walmart.

Oanda's Jeffery Halley commented: "Looking at the details of the Byte Dance deal, frankly, it looks terrible for the US, with Byte Dance retaining 80% of the international entity. It will raise questions as to why the US Government bothered in the first place, with the answer likely being to score a win before the US election."

Shares in HSBC Holdings were down 3.6% to a 25-year low on Monday in Hong Kong on fears it could be added to a Chinese list of firms deemed a threat to national security and following news it had been accused of allowing fraudulent activity to go unpunished, AFP reported.

HSBC shares dropped to HKD29.60 at one point on Monday in Hong Kong – a level not seen since mid-1995 – as investors fret over its ability to continue doing business in China and Hong Kong, which make up a crucial portion of its growth.

The sell-off came after the Global Times, a state-run English tabloid in China, reported the bank could be one of the first firms to be named on Beijing's "unreliable entity list" as part of a tit-for-tat stand-off with several western countries.

The report pointed to HSBC's participation in Washington's investigation of Huawei and the arrest of its chief financial officer Meng Wanzhou in Canada.

Meanwhile, according to an international journalism investigation published Sunday, massive sums of allegedly dirty money have flowed for years through some of the world's largest banking institutions, including HSBC and Standard Chartered.

Standard Chartered was down 3.2% in Hong Kong.

Financial markets in Japan are closed Monday and Tuesday as the country celebrates Respect for the Aged Day.

Gold was quoted at USD1,952.00 an ounce early Monday, flat against USD1,953.70 on Friday. Brent oil was trading at USD42.98 a barrel early Monday, lower than USD43.34 late Friday.

The UK corporate calendar on Monday will see retailer Superdry and IT services management firm GRC International issue full-year results. Biotech firm MaxCyte and blue chip publisher Informa will release half-year results.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Standard Chartered PLC 345.00 GBX -7.68
HSBC Holdings PLC 324.00 GBX 1.57

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