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(Alliance News) - A dour session in Asia looks set to carry over into the open in Europe on Wednesday, following disappointing Chinese trade data.
China's export growth slowed significantly in August, customs authorities said Wednesday, as economic uncertainty is exacerbated by strict Covid-19 lockdowns across the country.
Last month, China's exports expanded 7.1% year-on-year, slowing from 18% growth in July, China's General Administration of Customs said, while imports were up only 0.3%, compared with a 2.3% rise in July.
Analysts surveyed by Bloomberg forecast export growth of 13% and a 1.1% increase in imports.
Oil prices also were under pressure, thanks to the growing fear of recession, Swissquote analyst Ipek Ozkardeskaya said.
The US returned from its long weekend on Tuesday, with investors feeling uninspired.
"US markets had a slightly different day of it yesterday, closing lower after a strong ISM services survey for August which served to heighten the prospect that the Federal Reserve could go for another 75bps rate hike when it meets in two weeks' time. It's somewhat surprising that markets are still under-pricing the probability of the Fed doing this given recent pronouncements from various Fed members about front-loading," said Michael Hewson, chief market analyst at CMC Markets.
In the UK, house price growth slowed in August, the Halifax House Price Index showed.
Annually, house prices were up 11.5% in August, but this was slower than the 11.8% annual rise in July. August's print was also behind market consensus, according to FXStreet, which had forecast a 12.5% rise.
Versus the previous month, house prices increased by 0.4% in August, picking up from July's 0.1% drop.
The typical house price reached another record high in August of GBP294,620.
"While house prices have so far proved to be resilient in the face of growing economic uncertainty, industry surveys point towards cooling expectations across the majority of UK regions, as buyer demand eases, and other forward-looking indicators also imply a likely slowdown in market activity," Halifax's Mortgage Director Kim Kinnaird said.
New UK Prime Minister Liz Truss said she plans to put an end to the rise in energy prices, saying the country will "ride out the storm" - as she prepared a multibillion-pound package to help Britons cope with soaring energy costs.
In her first speech in the role, she acknowledged the economic headwinds facing the country but promised action this week to help with energy bills.
Here is what you need to know ahead of the London market open:
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MARKETS
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FTSE 100: called down 60.14 points, or 0.8%, at 7,240.30
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Hang Seng: down 1.9% at 18,843.60
Nikkei 225: closed down 0.7% at 27,430.30
S&P/ASX 200: closed down 1.4% at 6,729.30
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DJIA: closed down 173.14 points, or 0.6%, at 31,145.30
S&P 500: closed down 0.4% at 3,908.19
Nasdaq Composite: closed down 0.7% at 11,544.91
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EUR: down at USD0.9892 (USD0.9910)
GBP: down at USD1.1477 (USD1.1531)
USD: up at JPY144.08 (JPY142.90)
GOLD: down at USD1,696.70 per ounce (USD1,702.85)
OIL (Brent): down at USD91.45 a barrel (USD93.17)
(changes since previous London equities close)
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ECONOMICS
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Wednesday's key economic events still to come:
0830 EDT Canada international merchandise trade
1000 EDT Bank of Canada interest rate decision
1000 EDT Canada Ivey purchasing managers' index
1100 CEST EU GDP
1100 CEST EU employment
1000 CEST Italy retail sales
0900 CEST Switzerland SNB foreign currency reserves
0700 EDT US MBA weekly mortgage applications survey
0830 EDT US international trade in goods & services
0855 EDT US Johnson Redbook retail sales index
1400 EDT US Beige Book
1630 EDT US API weekly statistical bulletin
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New UK PM Truss will work to finalise a multi-billion package to freeze energy bills after conducting a brutal Cabinet cull of Rishi Sunak supporters and rewarding her allies with the top jobs. On Wednesday she will face Labour leader Keir Starmer in her first prime minister's questions, and is expected to continue with a reshuffle of government positions. First Truss will hold the debut meeting of her new-look Cabinet in the morning, as ministers seek to finish an emergency package to ease the cost of living crisis. New Chancellor Kwasi Kwarteng has summoned the bosses of major banks to discuss the new economic strategy, with fresh support possibly being announced as soon as Thursday.
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Truss and US President Joe Biden "agreed on the importance of protecting" peace in Northern Ireland, in a phone call on Tuesday hours after Truss became the UK's new leader. Truss told Biden that she also looked forward to "working closely" with Washington "as leaders of free democracies to tackle shared challenges," a Downing Street spokeswoman said. They include "the extreme economic problems unleashed by [Russian President] Putin's war," she added in a readout of their call. It comes amid reported concerns in the US over Truss, after her one-year tenure as foreign secretary saw post-Brexit tensions in Northern Ireland surface and strain Britain's ties with Brussels, Dublin and Washington.
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China and Australia could hold top-level talks for the first time since 2017, with senior figures from both countries this week signalling a willingness to break the years-long impasse. Australia's Prime Minister Anthony Albanese said that he would "welcome" such a meeting, when asked about the potential for talks on the sidelines of the G20 summit in November in Indonesia. "I'm open to dialogue with anyone at any time, particularly with leaders of other nations," he told reporters. The prime minister's comments came after China's ambassador to Australia, Xiao Qian, told ABC Tuesday that he would "love" to see Chinese President Xi Jinping meet with Albanese.
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BROKER RATING CHANGES
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Morgan Stanley cuts Phoenix Group to 'underweight' ('equal-weight') - price target 660 pence (710p)
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Morgan Stanley cuts AstraZeneca to 'equal-weight' ('overweight') - price target 660 pence (710p)
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COMPANIES - FTSE 100
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Housebuilder Barratt Developments said its annual results were boosted by an "excellent operational" performance. In the financial year to June 30, pretax profit slumped 21% to GBP642.3 million from GBP812.2 million the prior year. Revenue, however, improved 9.5% to GBP5.27 billion from GBP4.81 billion. Total completions increased by 3.9% to 17,908 from 17,243, which Barratt noted was a return to pre-pandemic levels. Barratt upped its total shareholder payout to 36.9 pence from 29.4p. Chief Executive David Thomas said the firm made "fantastic progress" in the period. Looking ahead, Barratt is targetting total home completion growth of 3% to 5% in financial 2023, to between 18,400 and 18,800 homes. Says, as of August 28, its private wholly owned home completions are 55% forward sold, valued at GBP3.81 billion.
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COMPANIES - FTSE 250
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WH Smith said its revenue in financial 2022 was "comfortably" ahead of its pre-Covid levels. "We have continued to see a strong performance from Travel in the second half," the retailer explained. Its Travel business has benefited from increased passenger numbers. WH Smith expects its annual results, for the financial year ended August 31, to be in line with the upgraded expectations.
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OTHER COMPANIES
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Identity data intelligence firm GB Group noted that Chicago-based private equity firm GTCR LLC has confirmed it is considering an offer for the firm. "Any proposals received will be evaluated by the board of GB together with its adviser," GB said. Notes GTCR has until October 4 to make a firm offer or walk away.
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Bakkavor Group said its first half performance was "robust", with revenue up double digits. In the six months to June 25, pretax profit slips 6.1% to GBP32.5 million from GBP34.6 million, but revenue was up 10% to GBP1.01 billion from GBP915.7 million, Like-for-like revenue increased 9.2%. Declares interim dividend of 2.77 pence, rising from the 2.64p payout last year. The fresh prepared food maker said its revenue momentum has continued through July and August and expects its annual revenue in line with the upper end of market expectations. Noted that market forecasts sees revenue between GBP1.99 billion and GBP2.09 billion.
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By Paul McGowan; paulmcgowan@alliancenews.com
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