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LONDON (Alliance News) - UK stocks are set to open lower Wednesday, continuing their losses from Tuesday as the Chinese yuan continues to fall against other major currencies following a second devaluation by Chinese authorities.
IG says futures indicate the FTSE 100 to open lower at 6,631.0. The index closed down 1.1% at 6,664.54 on Tuesday, after the surprise decision by the Chinese central bank to devalue to the yuan weighed on commodities and the shares exporters to China.
On Tuesday, the People's Bank of China had set the value of yuan at 6.2298 a dollar, 1.9% lower than Monday's official fixing rate. This was the biggest one-day reduction in value since 1994 and was an attempt to make the official exchange rate more market-determined and support the country's weakening exports.
China's central bank on Wednesday devalued the yuan for the second time in two days, to aid a slowing economy. It unexpectedly adjusted its daily reference exchange rate by a further 1.6%, setting it at 6.3306 to the US dollar. The yuan currently trades at 6.427 a dollar, its lowest level in over four years.
The concerns over China weighed on commodity prices Tuesday, sending shares in London-listed miners lower. Oil was also weighed upon by concerns about demand from the world's second biggest economy and because of oversupply in the market. Ahead of the London open Wednesday, Brent oil trades at USD48.95 a barrel and West Texas Intermediate is at USD42.98 a barrel.
In Asia, the Japanese Nikkei is down 1.4%, the Hang Seng trades down 2.1% and the Shanghai Composite is down 0.5%.
On Wall Street Tuesday, the DJIA closed down 1.2%, the S&P 500 ended down 1.0% and the Nasdaq Composite closed down 1.3%.
Also in focus on Wednesday will be UK unemployment data, expected at 0930 BST. The consensus according to FXStreet.com is for the ILO unemployment rate to stay steady for the three months to June at 5.6%, the same as what was seen in the three months to May.
Simultaneously released will be UK earnings data which are expected to grown 2.8% year-on-year excluding bonuses for the three months to June, matching the growth seen in the three months to May.
Elsewhere in the economic calendar, there is eurozone industrial production at 1000 BST, and US Energy Information Administration crude oil stocks at 1530 BST. After the close of London equity markets, there is the US monthly budget.
In the UK corporate calendar, outsourcer G4S reports half-year results, as does construction company Balfour Beatty, construction and support services company Interserve, gold miner Centamin, and property company CLS Holdings. Zoopla Property Group issues a trading statement, as does Volution Group.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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