LONDON MARKET EARLY CALL: Soft US Retail Sales Drive Market Weakness

(Alliance News) - Stock prices in London are set for another leg lower on Wednesday after ...

Alliance News 18 November, 2020 | 6:56AM
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(Alliance News) - Stock prices in London are set for another leg lower on Wednesday after weakness in New York overnight following some disappointing US retail sales data.

IG says futures indicate the FTSE 100 index of large-caps to open 36.63 points lower, or 0.6%, at 6,328.70 on Wednesday. The blue-chip index closed down 55.96 points, or 0.9%, at 6,365.33 on Tuesday.

"US equity markets drifted lower overnight, as US retail sales disappointed. That was enough of an excuse for investors to bank some recent gains," said Jeffrey Halley, senior market analyst at Oanda.

US retail and food service sales edged up just 0.3% month-on-month in October to reach USD553.3 billion, representing a slower rate of growth than the 1.6% recorded for September. Market consensus, according to FXStreet, had pencilled in 0.5% month-on-month rise for October.

"US retail sales sent a warning shot that Covid-19 is still with us, and its effects will not miraculously disappear overnight...In Europe, and especially the US, Covid-19 cases continue to soar, and movement restrictions across states continue to tighten," Halley added.

The number of coronavirus infections in Europe climbed past 15 million on Tuesday, according to an AFP tally from official sources.

The continent is the worst-hit region in the world, ahead of Latin America and the Caribbean which together have recorded 12.1 million cases and Asia with 11.5 million.

Globally more than 55 million Covid-19 infections have been registered since the pandemic began early in the year.

The state of South Australia announced a six-day "circuit-breaker" lockdown for its nearly two million people on Wednesday to contain a sudden coronavirus cluster in its capital city that ended a months-long streak of no infections. Schools, restaurants and factories were told to close at midnight while stay-at-home orders were issued for residents across the state.

It came as two new cases were linked to a cluster that emerged from an Adelaide hotel used to quarantine travellers from overseas, taking the outbreak to 22 cases.

In the US on Tuesday, Wall Street ended in the red, with the Dow Jones Industrial Average down 0.6%, the S&P 500 down 0.5% and the Nasdaq Composite down 0.2%.

In Asia on Wednesday, the Japanese Nikkei 225 index closed down 1.1%. In China, the Shanghai Composite is up 0.2%, while the Hang Seng index in Hong Kong is up 0.2%.  

The dollar was slightly lower early Wednesday in London.

Against the yen, the dollar edged down to JPY104.02 versus JPY104.22.

Sterling was quoted at USD1.3259 early Wednesday, firm on USD1.3254 at the London equities close on Tuesday. The euro traded at USD1.1872 early Wednesday, up slightly USD1.1866 late Tuesday.

Gold was quoted at USD1,879.11 an ounce early Wednesday, lower than USD1,887.43 on Tuesday. Brent oil was trading at USD43.75 a barrel, higher than USD43.40 late Tuesday.

The economic events calendar on Wednesday has UK and eurozone inflation readings at 0700 BST and 1000 GMT respectively.

The UK corporate calendar on Wednesday has interim results from electricity utility SSE and property developer British Land.

By Lucy Heming; lucyheming@alliancenews.com

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