LONDON MARKET EARLY CALL: Lower call as investors eye central banks

(Alliance News) - Stock prices in London are seen opening lower on Monday after a sharp sell-off ...

Alliance News 20 September, 2021 | 5:59AM
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(Alliance News) - Stock prices in London are seen opening lower on Monday after a sharp sell-off in Hong Kong, as investors look ahead to a week of interest rate decisions from major central banks.

IG futures indicate the FTSE 100 index is to open 24.42 points lower at 6,919.60. The London index ended down 83.46 points, or 1.2%, at 6,944.02 on Friday.

In the US on Friday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.5%, S&P 500 down 0.9% and Nasdaq Composite down 0.9%.

In Asia, the Hang Seng index in Hong Kong was down 3.6%. Financial markets in Japan were closed on Monday for the Respect for the Aged Day holiday, while in Shanghai, the stock market was closed for the Mid-Autumn Festival. The S&P/ASX 200 in Sydney was down 2.0% near the close.

The Hong Kong stock exchange tumbled Monday over fears of a contagion from the potential collapse of Chinese real estate firm Evergrande Property Services Group, as it struggles under a mountain of debt.

The firm, one of the country's biggest developers, warned it may not be able to repay loans and interest on its bonds - totalling more than USD300 billion - and could go under. With some payments due Monday and Thursday, investors are keeping a nervous eye on the crisis, which has fanned fears of a domestic and international contagion.

Evergrande shares were down 9.1% in Hong Kong.

"With Japan and mainland markets in China closed today, this morning's Asia session has been a negative one as concerns over the future of Chinese real estate company Evergrande increase further, sending the Hang Seng sharply lower. As a consequence today's European open looks set to be a negative one, with the FTSE 100 looking set to open at its lowest levels since July 22. The newly formatted DAX is also expected to open lower in a similar fashion," said CMC Markets analyst Michael Hewson.

In Germany, ten companies will join the DAX on Monday as the blue-chip stock market index undergoes its biggest facelift in its 33-year history.

At the opening of the market in Frankfurt at 0900 local time, the new entrants, amongst them European aerospace firm Airbus and online shopping company Zalando, will turn the DAX 30 into a DAX 40.

The pound was quoted at USD1.3770 early Monday, up from USD1.3752 at the London equities close Friday.

On the economic front, the average price tag on a UK house hit a new record high of GBP338,462 in September.

The new asking price peak across Britain is just GBP15 higher than a previous record set in July, Rightmove said. The average asking price for a home increased by 0.3%, or GBP1,091, month-on-month in September.

The euro was priced at USD1.1717, down from USD1.1734. Against the Japanese yen, the dollar was trading at JPY109.90, little changed from JPY109.92.

Brent oil was quoted at USD74.81 a barrel Monday morning, down from USD75.06 late Friday. Gold stood at USD1,750.40 an ounce, slightly lower from USD1,754.70.

The economic events calendar on Monday has Germany producer prices at 0700 BST.

Ahead this week, the economic calendar is headlined by interest rate decisions by the Bank of Japan and US Federal Reserve on Wednesday and by the Bank of England on Thursday.

The UK corporate calendar on Monday has annual results from Finsbury Food and interim results from Frenkel Topping.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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