LONDON MARKET EARLY CALL: Stocks To Extend Gains With PMIs In Focus

(Alliance News) - London's rebound is set to continue on Wednesday with a raft of flash September ...

Alliance News 23 September, 2020 | 6:56AM
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(Alliance News) - London's rebound is set to continue on Wednesday with a raft of flash September PMI prints the main focus of the day.

IG says futures indicate the FTSE 100 index of large-caps to open 71.94 points higher at 5,901.40 on Wednesday. The FTSE 100 closed up 25.17 points, or 0.4%, at 5,829.46 on Tuesday.

"After the sea of red that characterised Monday's sell-off, we saw a little bit of a turnaround on Tuesday, though not to the extent that we got anywhere close to changing the narrative of an ever-increasing concern about the economic outlook heading into year end," said Michael Hewson, chief market analyst at CMC Markets.

In the US on Tuesday, Wall Street ended in positive territory, with the Dow Jones Industrial Average ending up 0.5%, the S&P 500 up 1.1%, and the Nasdaq Composite up 1.7%.

CMC's Hewson said: "This strong performance on the part of US stocks is likely to translate into a similarly positive open for European stocks this morning, however there is rising concern that in light of surging infection rates across Europe, and the beginnings of a rise in hospitalisations, that the economic rebound from the lockdown lows is set to finish the year with a whimper."

A slew of PMI readings on Wednesday will round out the third quarter, which has seen a recovery in economic activity after the damage caused by the lockdowns of March and April. However, the rate of rebound slowed in August, so Wednesday's flash readings for September will be closely-watched.

There are PMIs from France, Germany, the eurozone, UK and the US at 0815 BST, 0830 BST, 0900 BST, 0930 BST and 1445 BST respectively.

The euro traded at USD1.1715 early Wednesday ahead of the data, marginally higher than USD1.1702 late Tuesday.

Sterling was quoted at USD1.2723 early Wednesday, firm on USD1.2717 at the London equities close on Tuesday.

The country faces an "unquestionably difficult" winter, UK Prime Minister Boris Johnson warned after announcing coronavirus restrictions which could last six months.

Johnson set out a package of measures for England, with office staff once again working from home, the wider use of face masks and a 10pm curfew on pubs and restaurants. He said that the new curbs could continue well beyond Christmas and New Year, unless there was progress in controlling the spread of the virus – and indicated tougher restrictions could be imposed if they failed.

The new package of measures – and similar or tougher measures elsewhere in the UK – followed scientists' warnings that the number of cases was doubling every seven days.

In Asia on Wednesday, the Nikkei 225 index is down 0.3% as Japanese financial markets start the week late after holidays on Monday and Tuesday. Against the yen, the dollar was quoted at JPY105.10, versus JPY105.00 on Tuesday afternoon in London.

Business activity in Japan improved in September, but remained at contraction levels with continued declines in output, new orders and work backlog, flash PMI estimates from IHS Markit showed on Wednesday.

The Jibun Bank flash composite purchasing managers' index for Japan was 45.5 points, up from the final reading for August of 45.0. A reading above 50 points indicates expansion in the sector and one below a contraction.

The flash services PMI rose marginally to 45.6 in September from 45.0 in August, reflecting weaker declines in output, new orders and employment. However external demand remained weak, and the fall in incomplete work weighed on hiring, leading to employment falling for the seventh straight month.

In China, the Shanghai Composite is up 0.3%, while the Hang Seng index in Hong Kong is up 0.2%.  

Gold was quoted at USD1,886.10 an ounce early Wednesday, lower than USD1,904.86 late Tuesday in London. Brent oil was trading at USD41.44 a barrel early Wednesday, soft on USD41.60 late Tuesday.

The UK corporate calendar on Wednesday has annual results from personal care products maker PZ Cussons and interim results from tenpin bowling operator Ten Entertainment.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

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