(Alliance News) – Stocks in London are set for another soggy start on Thursday amid lower oil prices and continued subdued sentiment due to trade war fears.
IG says futures indicate the FTSE 100 index of large-caps to open 20.02 points lower at 7,347.60 on Thursday. The FTSE 100 index closed down 30.83 points, or 0.4%, at 7,367.62 on Wednesday.
“A cheaper pound may not be enough to increase the appetite in UK stocks this morning; energy stocks will likely feel the pinch of falling oil prices,” said Ipek Ozkardeskaya, senior market analyst at London Capital Group.
Data on Wednesday showed crude stockpiles in the US rose by 2.2 million barrels in the week to June 7, beating expectations for a sharp drop. A week earlier, crude stockpiles had increased by 6.8 million barrels.
This came after data released by the American Petroleum Institute on Tuesday evening said US crude inventories rose by 4.9 million barrels in the week ended June 7 to 482.8 million barrels. That compared with analysts’ expectations for a decrease of 481,000 barrels.
“Traders are waiting for OPEC to announce an extension of the production cuts, some hope for deeper cuts, as the current deal will expire end of June,” said Ozkardeskaya.
Brent oil was quoted at USD60.50 a barrel early Thursday, down from USD60.85 a barrel at the London equities close on Wednesday. This, in turn, had been down sharply from USD62.54 at the close Tuesday.
Overnight, Brent dipped below USD60 a barrel as the commodity traded around its worst levels in 2019.
Meanwhile, sterling was quoted at USD1.2691 early Thursday, lower than USD1.2727 at the London equities close on Wednesday.
UK members of Parliament opposed to a no-deal Brexit have failed in their latest attempt to seize control of parliamentary business in a bid to stop the next prime minister taking Britain out of the EU without a deal with Brussels.
The Commons voted Wednesday by 309 to 298 to defeat a cross-party motion which would have given MPs control of the business of the House on June 25.
Earlier, Boris Johnson launched his bid to succeed Theresa May with a warning that Britain must leave the EU by the latest deadline of October 31, with or without a deal.
In the US on Wednesday, Wall Street ended lower, with the Dow Jones Industrial Average ending down 0.2%, the S&P 500 also shedding 0.2% and Nasdaq Composite closing off 0.4%.
US President Donald Trump said he will meet his Russian counterpart Vladimir Putin at the G20 summit later this month and also confirmed he will have talks with Chinese President Xi Jinping in Japan to discuss trade.
“I have a feeling we are going to make a deal with China,” Trump said on Wednesday at the White House, but also cautioned: “I’d like to make a deal but we will see what happens.”
David Madden at CMC Markets said trade concerns are likely to persist in the near-term, but “we might not see major moves in global stock markets until the G20 summit”.
In Asia on Thursday, the Japanese Nikkei 225 index is down 0.8%. In China, the Shanghai Composite is down 0.1%, while the Hang Seng index in Hong Kong is down 0.9%.
Hong Kong’s Legislative Council remained closed on Thursday as debate on a controversial bill that would allow extraditions to mainland China was put on hold for another day.
Despite Wednesday’s protests and a march on Sunday that drew an estimated 1 million people – around one in 7 people in the semi-autonomous city – Hong Kong’s leader, Chief Executive Carrie Lam has vowed to pass the bill before the legislature’s summer recess.
The extradition bill would allow for Hong Kong to send criminal suspects to countries where it lacks a long term agreement, including China.
The economic events calendar on Thursday has Germany inflation readings at 0700 BST, eurozone industrial production at 1000 BST and US import and export prices at 1330 BST.
The UK corporate calendar on Thursday has annual results from paper and packaging company DS Smith, wine retailer Majestic Wine, and currency manager Record. There are also first-quarter earnings from supermarket chain Tesco and a trading statement from personal care products maker PZ Cussons.
By Lucy Heming; email@example.com
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