(Alliance News) – Shares in London are set to open lower on Wednesday amid heightened concerns about the Chinese economy, US interest rates and the potential downgrade of US bank ratings.
IG says futures indicate the FTSE 100 is set to open down 13.1 points, or 0.2%, at 7,376.54 on Wednesday. The London large-cap index closed down 117.51 points, or 1.6%, at 7,389.64 on Tuesday.
Investors will focus on UK inflation data due soon. The annual figure is expected to decline to 6.8% in July from 7.9% in June. Core inflation is expected to decline to 6.8% from 6.9%.
The Dollar gained on hawkish rhetoric from a member of the Fed’s interest rate setting committee.
The pound was listed at $1.2705 early Wednesday, down from $1.2733 at the close of London stock markets on Tuesday. The euro was trading at $1.0915, down from $1.0926. Against the yen, the dollar was listed at 145.45 yen, up slightly from 145.40 yen.
US inflation may finally be moving in the right direction, but the Federal Reserve is unlikely to claim victory just yet, according to Minneapolis Fed Chairman Neel Kashkari. “I’m not ready to say we’re done, but I see positive signs,” Kashkari told a conference in the city.
The release of the Fed’s meeting minutes later today will provide insight into the reasoning behind the Fed’s latest interest rate decision.
The prospect of further interest rate hikes drove equities lower. In the United States on Tuesday, Wall Street ended lower, with the Dow Jones Industrial Average down 1.0%, the S&P 500 down 1.2% and the Nasdaq Composite down 1.1%.
Additionally, sentiment was hurt by an analyst warning from Fitch Ratings.
Mr Wolfe downgraded his assessment of the sector’s health in June, a move that went largely unnoticed because it did not lead to a downgrade in any one bank’s rating. But another one-notch downgrade in the sector’s rating, from AA- to A+, would force Fitch to reassess the ratings of each of the more than 70 U.S. banks it covers, Wolfe told CNBC.
Speaking on CNBC, Fitch’s Chris Wolfe said the agency could be forced to lower the ratings of several banks.
JPMorgan lost 2.6%, Wells Fargo fell 2.3% and Citigroup closed down 2.0%.
In Asia on Wednesday, the Nikkei 225 index in Tokyo was down 1.3%. The S&P/ASX 200 index in Sydney was down 1.5%.
In China, the Shanghai Composite Index was down 0.6%, while the Hang Seng Index in Hong Kong was down 1.6%.
Figures released by China’s National Bureau of Statistics on Wednesday showed new house prices fell for the second month of July, a further indication of the problems facing the heavily indebted real estate sector and the economy as a whole. together. The data comes on top of a string of weaker-than-expected numbers released on Tuesday that show slowing growth in retail sales and industrial production.
Several banks lowered their growth forecasts for China in the wake of the data, with JPMorgan Chase cutting its estimate for 2023 to 4.8%, well below a previous forecast of 6.4% in May. reported Bloomberg. Barclays also reduced its estimate to 4.5%.
Oil prices continued to fall due to weaker demand prospects from China. A barrel of Brent was trading at $84.66 early Wednesday, down from $84.79 on Tuesday.
Gold was listed at $1,904.03 an ounce, down from $1,907.15.
Wednesday’s economic calendar includes the UK inflation reading at 0700 BST, ahead of Eurozone gross domestic product data at 1000 BST. The minutes of the last Federal Reserve meeting are published at 7:00 p.m. BST.
The local business calendar includes half-year results from insurers Admiral and Aviva.
By Elizabeth Winter, Senior Markets Reporter at Alliance News
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2023-08-16 05:52:06
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