LONDON MARKET EARLY CALL: Stocks to rebound after Evergrande fears

(Alliance News) - Stock prices in London are seen opening higher on Tuesday, rebounding from ...

Alliance News 21 September, 2021 | 7:02AM
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(Alliance News) - Stock prices in London are seen opening higher on Tuesday, rebounding from sharp losses on Monday linked to a possible large debt default in China, as investors look ahead to the US Federal Reserve's two-day monetary policy meeting starting Tuesday.

IG futures indicate the FTSE 100 index is to open 48.39 points higher at 6,952.30. The blue-chip index closed ended down 59.73 points, or 0.9%, at 6,903.91 on Monday.

In the US on Monday, Wall Street ended sharply lower, with the Dow Jones Industrial Average down 1.8%, S&P 500 down 1.7% and Nasdaq Composite down 2.2%.

The Japanese Nikkei 225 index was down 1.8% on Tuesday, Tokyo reopening after being closed on Monday for a holiday. The Hang Seng index in Hong Kong was down 0.6%. Markets in Shanghai remained closed for the Mid-Autumn Festival. The S&P/ASX 200 in Sydney was up 0.2%.

Evergrande Property Services Group, one of China's biggest developers, is on the brink of collapse as it wallows in debts of more than USD300 billion.

There are fears that Chinese authorities may not be able to contain the fallout of the firm's potentially disorderly collapse, which could affect many other companies and poses contagion risks, experts say.

Evergrande shares were up 1.0% in Hong Kong, having closed down 11% on Monday.

CMC Markets analyst Michael Hewson commented: "With Japanese markets returning today it is perhaps no surprise that we've seen a weaker Nikkei 225, as concerns over events in China, rising costs, and slowing growth keep investors on the back foot, however the losses while heavy have been contained, and with that European markets look set to open modestly higher this morning, with US futures also rebounding. Concerns about Evergrande remain but for now there appears to be a wait and see approach being adopted."

On the political front, UK Prime Minister Boris Johnson blamed his lack of a post-Brexit trade deal with the US on President Joe Biden having "a lot of fish to fry" as he heads to the White House with the hope of restarting the stalled negotiations.

The UK PM suggested the free trade agreement touted by Leave supporters as a major prize of leaving the EU was not high on the president's list of priorities. Johnson was expected to push to get talks going on Tuesday when he makes his first visit to the White House since Biden succeeded Donald Trump.

The pound was quoted at USD1.3675 early Tuesday, down slightly from USD1.3678 at the London equities close Monday.

The euro was priced at USD1.1735, little changed from USD1.1734. Against the Japanese yen, the dollar was trading at JPY109.55, up from JPY109.46.

Brent was quoted at USD74.61 a barrel Tuesday morning, flat from USD74.58 late Monday. Gold stood at USD1,762.35 an ounce, marginally lower from USD1,764.07.

The economic events calendar on Tuesday has UK public sector finance figures at 0700 BST. The US Federal Reserve's two-day monetary policy meeting gets underway, with an announcement on Wednesday at 1900 BST.

The UK corporate calendar has half-year results from DIY retailer Kingfisher and chipmaker Alphawave IP. Catering firm Compass releases a trading statement.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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