LONDON MARKET EARLY CALL: Stocks Seen Steadying After Sharp Sell-Off

(Alliance News) - Stocks in London are set to stage a slight rebound on Tuesday after starting ...

Alliance News 22 September, 2020 | 6:57AM
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(Alliance News) - Stocks in London are set to stage a slight rebound on Tuesday after starting the week with drastic losses as partial Covid-19 lockdown loomed in the UK.

IG says futures indicate the FTSE 100 index of large-caps to open 22.71 points higher at 5,827.00 on Tuesday. The FTSE 100 closed down 202.76 points, or 3.4%, at 5,804.29 on Monday.

London's blue-chip index ended Monday sharply lower as Covid-19 infections begin to pick up again in Europe, with the UK recording another 4,368 cases - levels not seen since early May when the country was still in a stringent lockdown.

The UK government will on Tuesday announce new measures to curb rising coronavirus cases across England, hours after upgrading the virus alert level with top advisers warning of a surging death toll within two months without immediate action.

Under new rules to come into force on Thursday, English pubs, bars and other hospitality venues will be required to close at 2200 BST while food and drink outlets will be restricted to table service only.

The ramped-up response follows warnings on Monday that the country could see up to 50,000 cases a day by mid-October, and a month later exceed 200 deaths every day.

The government's Joint Biosecurity Centre later changed its Covid-19 alert level from three to four to reflect the increase in cases. Level three states that the epidemic is in general circulation while level four reflects that "transmission is high or rising exponentially".

UK Prime Minister Boris Johnson will chair a meeting of Britain's COBR emergencies committee Tuesday morning ahead of making a statement to parliament. He will also address the nation on live television at around 1900 GMT to detail how the restrictions will help flatten the upward curve in cases going into the winter months when other respiratory infections are typically high.

Sterling was quoted at USD1.2806 early Tuesday, higher than USD1.2795 at the London equities close on Monday.

The sell-off on Wall Street on Monday was less severe than in Europe.

The Dow Jones Industrial Average ended down 1.8% and the S&P 500 down 1.2%, but the Nasdaq Composite edged just 0.1% lower.

"Yesterday's US session saw the S&P 500 close lower for the fourth day in succession, its worst run since March; however we did manage to close well off the lows, helped by a rebound in tech which helped the Nasdaq almost climb back off the canvas, closing down a modest 0.13%. Asia markets on the other hand have continued the negative tone, with travel and leisure bearing the brunt," said Michael Hewson, chief market analyst at CMC Markets.

"That said the late recovery in the US could manifest itself into a modest rebound for markets here in Europe when they reopen."

In Asia on Tuesday, the Shanghai Composite is down 0.4%, while the Hang Seng index in Hong Kong is down 0.6%. Tokyo is closed for a second day Tuesday for Autumn Equinox Day.

Against the yen, the dollar fell to JPY104.53 versus JPY104.65.

Under-pressure lenders HSBC and Standard Chartered lost further ground in Hong Kong on Tuesday, with HSBC down 2.7% and StanChart down 2.2%. In London on Monday, the pair had closed down 5.3% and 5.8%, respectively.

Amid rising concerns about being blacklisted by the Chinese government, the two banks also were named in an report for failure to prevent fraud. An investigation by Buzzfeed News and the International Consortium of Investigative Journalists alleges that potentially dubious transfers worth about USD2.0 trillion took place at a host of banks between 1999 and 2017.

Five banks - also including JPMorgan Chase, Deutsche Bank and Bank of New York Mellon - were specifically accused of continuing to move assets of alleged criminals, even after being fined for earlier failures to stem flows of dirty money.

The euro traded at USD1.1758 early Tuesday, higher than USD1.1745 late Monday.

Gold was quoted at USD1,910.30 an ounce early Tuesday, higher than USD1,904.24 on Monday. Brent oil was trading at USD41.30 a barrel, down from USD41.50 late Monday.

The economic events calendar on Tuesday has US existing home sales at 1500 BST.

The UK corporate calendar on Tuesday annual results from merchant bank Close Brothers and interim results from DIY retailer Kingfisher.

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 399.40 GBX 4.20
HSBC Holdings PLC 321.40 GBX 4.71

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