FTSE 100 preview: UK benchmark to open lower amid weak China data

on Mar 24, 2014
Updated: Apr 9, 2020

iNVEZZ.com, Monday, March 24: Britain’s blue-chip index is expected to open lower today, dragged down by a slump in Chinese manufacturing activity and continued concerns about the situation in Ukraine. On Friday, the Footsie posted its first weekly gain in a month boosted by hopes that China would take more steps to stimulate its economy.

**FTSE 100 to ease amid China woes**
CNBC reports that the Footsie is likely to open around 24 points lower at 6533 after having closed 0.23 percent higher at 6,557.17 points on Friday. The Footsie posted its first weekly gain in a month, supported by a rally in mining stocks which benefitted from optimism that China would step up efforts to stimulate its economy.

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Today, HSBC’s flash Purchasing Managers’ Index (PMI) for China came in at an eight month low of 48.1 for March, below the market consensus of 48.7, renewing worries about the health of the world’s second-largest economy.
Reuters quoted Eva Lucas, market strategist at IG, as saying that the concerns about China’s growth were “likely to remain over the coming weeks as the slowdown in orders over the winter months and Chinese Luna New Year filter out”.

In Asian trading, shares were initially hit by the China March HSBC flash PMI but then turned higher on hopes that Beijing would unveil fresh monetary stimulus to combat slowing growth.
“The worse the PMI data is, the bigger the chance of stimulus, so perhaps people are looking at it that way,” Dariusz Kowalczyk, a Credit Agricole CIB strategist, told Bloomberg.

Investors are also likely to stay cautious amid concerns about the crisis in Ukraine with reports by Reuters suggesting that Russian troops were trying to seize a Ukrainian naval base in the disputed Crimea region.

Meanwhile, market participants are this morning awaiting flash PMI data from France, Germany and the Eurozone.

**Energy stocks in focus**
Centrica Plc (LON:CNA) and SSE Plc (LON:SSE) are likely to be in focus today amid break-up concerns.
The Sunday Times reported yesterday that this week energy regulator Ofgem is expected to announce its intention to refer Britain’s big six energy companies to the new Competition and Markets Authority (CMA). The CMA, which takes over from the Competition Commission next month, could break up the big six, including Centrica and SSE, forcing the separation of their power-generation and retail arms.
Last month, Energy Secretary Ed Davey intervened with a letter to Ofgem asking the regulator whether Centrica’s British Gas unit was too profitable and should be broken up, with the news sending Centrica’s share price plunging in London trading. (Centrica share price drops as Davey takes aim at British Gas margins)
Today is the first day that Barratt Developments (LON:BDEV) and St James’s Place (LON:STJ) are trading as FTSE 100 companies following the index’s last quarterly review which marked the exit of Tate & Lyle (LON:TATE) and AMEC (LON:AMEC).


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