FTSE 100 preview: Index expected to open higher following Chinese stimulus

on Apr 20, 2015
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The FTSE 100 Index is expected to open higher today, following news of further Chinese stimulus measures which lifted Shanghai stocks in an otherwise choppy Asian trading session. The measures managed to calm the markets, which were spooked on Friday after the Chinese authorities announced a crackdown on over-the-counter margin trading. The subsequent global sell-off contributed to a significant decline of the FTSE 100, which was also weighed down by concerns of a possible Greek debt default. The Greek issue is expected to continue to affect the European market throughout the day.

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The Footsie closed 0.93 percent, or 65.82 points lower, on Friday at 6,994.63. According to data from spread bettor IG, Britain’s blue-chip equity index will open around 37 points higher in today’s trading.
UK equity markets saw sharp losses on Friday, with the Dow Jones Industrial Average closing 1.54 percent lower at 17826.30 points while the S&P 500 was down 1.13 percent to 2081.18. JJ Kinahan, chief strategist at TD Ameritrade, attributed the decline to “profit taking”, while Tower Bridge Advisors’ chief investment officer Jim Meyer said that the main factors behind the fall were “concerns about Greece, and the put trading rules (in) China”.
Over the weekend,The People’s Bank of China lowered the reserve requirement ratio (RRR) for all banks by 100 basis points. The larger than expected reduction was the second such move by the central bank in two months.”The RRR cut attempted to put a calm on markets after Friday’s news, but the magnitude of the cut was more than what the market priced in,” said Catherine Yeung, investment director at Fidelity Worldwide Investment, as quoted by CNBC.
The move has spurred a rally in Chinese shares today, with the Shangai Composite Index rising 1.48 percent at 4,350.72 points, as of 06:22 BST. Meanwhile, Japan’s Nikkei 225 index was 0.14 percent lower at 19,625.05 points as of 06:40 BST.
Back in Europe, today’s highlights from the economic calendar include German PPI data due out at 07:00 BST. Spain’s trade balance will also be released today. As for corporate releases, there are no FTSE 100 companies scheduled to update the market today.

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