FTSE 100 preview: Downbeat start ahead as investors digest China data

on Oct 19, 2015

The UK benchmark index looks set to open marginally lower this morning, with investors reacting to lacklustre gross domestic product (GDP) data out of China. The Footsie closed in positive territory on Friday amid expectations of new stimulus measures from the world’s second-largest economy.

CNBC reports that the FTSE 100 is expected to start the day four points lower at 6374. Investors are likely to shrug off a positive lead from the US where stocks rose on Friday with mixed economic figures fuelling speculation that the Federal Reserve would delay a rate hike. In Asia, stocks have been mixed this morning after data showed that China’s economy had expanded 6.9 percent year-on-year in the third quarter, above expectations for 6.8 percent, but marking the country’s weakest pace of growth since the financial crisis.

“Some investors were caught on the wrong side with the Chinese data and there is some broad short covering but the in-line data means that we are unlikely to get any immediate stimulus being announced so markets are likely to trade sideways,” a trader at a US bank in Hong Kong told Reuters.
The FTSE 100 added 39.37 percent to close 0.62 percent higher at 6,378.04 on Friday with investors weighing the prospects of further monetary stimulus out of China. Shire (LON:SHP) was the biggest gainer in percentage terms, adding 3.11 percent to 4,511.00p, amid speculation that it was preparing a bid for US rival Radius Health. The London-listed rare disease specialist is likely to stay on the investor radar today after saying over the weekend that US regulators had declined to approve its key pipeline medicine lifitegrast without additional data.
There are no major macroeconomic releases this morning. While no FTSE 100 companies are due to update investors on their recent performance, banking shares are likely to be in focus ahead of a highly-anticipated report into the UK’s retail banking market due later this week, and after Deutsche Bank announced it will split its investment bank in two as part of a sweeping overhaul.

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