FTSE 100 preview: Blue-chip index to track Asia higher

on May 3, 2016

The UK benchmark index looks set to kick off the shortened week in positive territory, tracking Asian shares higher, as the Reserve Bank of Australia (RBA) cut interest rates. On the corporate front, HSBC Holdings (LON:HSBA) has posted its first-quarter statement this morning.

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IG’s opening calls suggest that the Footsie will start the day 31 points higher at 6,273. The blue-chip index is likely to take cues from the Asia-Pacific where shares have gained ground as the RBA cut rates by 25 basis points to a new all-time low of 1.75 percent. The China Caixin manufacturing purchasing managers’ index (PMI) for April, however, slipped to 49.4 last month from March’s 49.7, shrinking for a 14th consecutive month.

In the US, stocks closed higher yesterday, kicking off May on an upbeat note, helped by a decline in the dollar index.
“What you’ve got going on is the dollar has been weak (and) rotation into beaten-down, more economically-sensitive sectors,” Jonathan Lamensdorf, managing director and portfolio manager at Highland Capital Management, told CNBC.
The UK market was closed yesterday for a bank holiday. On Friday, the Footsie shed 80.51 points to close 1.27 percent in the red at 6,241.89. Royal Bank of Scotland Group (LON:RBS) was the biggest blue-chip faller in percentage terms, shedding 6.05 percent to 230p, after the bailed-out lender’s first-quarter results disappointed investors.
Today’s macroeconomic calendar includes the UK manufacturing PMI for April, due out at 09:30 BST. IG reports that activity is expected to have increased last month with the PMI number climbing to 51.2 from 51.
In corporate releases, HSBC, which is also listed in Hong Kong, revealed this morning that this year’s market volatility had weighed on its first-quarter performance, with the Asia-focused lender posting an 18.2-percent decline in net profit.


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