FTSE 100 preview: Index seen subdued after German election

on Sep 25, 2017

The UK benchmark index looks set to start the week on the back foot, amid uncertainty over Germany’s election. Tesco (LON:TSCO) will be in focus today with three former executives accused of fraud and false accounting due to stand trial.

IG’s opening calls suggest that the Footsie will start the session 0.15 percent lower at 7,300 points. The blue-chip index is likely to take cues from Asia, where stocks have retreated this morning as German Chancellor Angela Merkel won a fourth term but faces a fractured parliament, while the nationalist Alternative for Germany (AfD) won parliamentary seats for the first time. The news has weighed on the euro.

“The market reacted by selling the euro on the possibility of Merkel running into difficulties in forging a coalition,” said Daisuke Karakama, chief market economist at Mizuho Bank in Tokyo, as quoted by Reuters. “The election outcome in Germany showed the country was no longer a special presence in Europe amid growing support for populism and the far right.”

In the US, stocks rose on Friday, finding support in the healthcare sector. Apple, however, lost ground in the wake of the release of several new products. At home, the Footsie rose on Friday, adding 46.76 points to end the session 0.64 percent higher at 7,3101.64. AstraZeneca (LON:AZN) was the session’s biggest riser in percentage terms, adding 3.01 percent to 4,912.00p.

Today’s macroeconomic releases include Germany’s IFO business climate sentiment index for the current month, due out at 09:00 BST. In the US, the Chicago Fed National Activity Index for August is scheduled to be released at 13:30 BST. Tesco will be in focus today as three former executives face trial for the accounting scandal which hit Britain’s biggest retailer about three years ago.