FTSE 100 preview: Index seen lower after North Korea’s nuclear test

on Sep 4, 2017
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The UK benchmark index looks set to start the week on the back foot, with geopolitical worries returning following North Korea’s latest move. Tesco (LON:TSCO) will be in focus today with three of its former directors set to stand trial over the company’s £263-million accounting scandal.

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IG’s opening calls suggest that the FTSE 100 will start the session 0.14 percent lower at 7,428 points. Sentiment is likely to be subdued after news emerged that North Korea had tested a hydrogen bomb over the weekend. The move has pressured Asian stocks this morning.

“Like a bad horror movie, the North Korea saga intersperses moments of calm, with occasional action to jolt you out of your chair,” said ING’s head of Asian research than Rob Carnell, as quoted by Reuters, adding, however, that unless that was “the precursor to US military action, which we doubt, then in a little over a day or two, tensions will calm again, making this a good buying opportunity for investors with a strong enough nerve”.

In the US, stocks closed higher on Friday, as investors digested a weaker-than-expected jobs report.

“August’s nonfarm data is disappointing but should be viewed the context of solid US and global economic growth, strong earnings, low inflation and still-ample global liquidity which will likely allow the US rally to continue,” said Kully Samra, UK managing director at Charles Schwab, in a note, as quoted by CNBC.

The FTSE 100 rose marginally on Friday, adding 7.88 points to end the session 0.11 percent higher at 7,438.50, finding support in strong miners which tracked metals prices higher.

Today’s macroeconomic releases include the UK construction purchasing managers’ index for August, due out at 09:30 BST, and IG reports that the index is expected to have fallen to 51.7 last month, from 51.9 in July. In the US, markets will be closed for Labour Day. On the company front, Micro Focus (LON:MCRO) is the only blue-chip company scheduled to update investors on its performance this morning. 

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