FTSE 100 preview: More losses ahead as yuan devaluation weighs on sentiment

on Aug 12, 2015

The UK benchmark index is expected to extend yesterday’s losses this morning with China’s move to devalue the yuan continuing to weigh on investor sentiment around the world. With the earnings season winding down, G4S (LON:GFS) is the only FTSE 100 company due to update investors on its recent performance today.

CNBC reports that Britain’s blue-chip index is seen opening 40 points lower at 6,624, with the yuan-related sell-off expected to continue this morning. Stocks in the US tumbled in yesterday’s session after China’s surprise move to devalue its currency.
“The major concern is, the prospect of a China hard landing is more ominous as far as its impact on global growth,” Eric Wiegand, senior portfolio manager at US Bank’s Private Client Reserve, said, as quoted by CNBC. Asian stocks slipped further this morning after the People’s Bank of China allowed the yuan to fall sharply for a second day.

“China’s currency moves will hurt appetite for risky assets such as equities and commodities,” Rajeev De Mello, head of Asian fixed income at Schroders in Singapore, told Reuters.
At home, the Footsie lost 71.68 points to close 1.06 percent lower at 6,664.54. China’s move pressured London-listed miners and Burberry (LON:BRBY) on account of the group’s exposure to the world’s second-biggest economy. Burberry’s share price lost 4.42 percent to end the session at 1,536.00p.
Today’s macroeconomic announcements include UK unemployment data for June scheduled to be released at 09:30 BST, followed by US crude oil inventories due out at 15:30 BST. On the corporate front, G4S is set to update investors on its half-year performance this morning. The results will come after the blue-chip outsourcing group scrapped its first-quarter update earlier this year.

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