LONDON (Alliance News) - The FTSE 100 is called to open lower Monday following the report of another contraction in the Chinese manufacturing sector.
IG says futures indicate the FTSE 100 to open lower at 6,670.0. The index closed up 0.4% at 6,696.28 on Friday.
On Wall Street Friday, the DJIA closed down 0.3%, the S&P 500 ended down 0.2% and the Nasdaq Composite closed flat.
In Asia Monday, the Japanese Nikkei ended down 0.2%, the Hang Seng trades down 1.1% and the Shanghai Composite down 2.7%.
China's manufacturing sector contracted further to a two-year low in July, due to renewed falls in total new work and new export orders, the latest survey from Caixin and Markit Economics showed.
The Caixin manufacturing purchasing managers' index, dropped to 47.8 in July from 49.4 in June. The latest data is below the flash score of 48.2 and signalled the sharpest deterioration in the health of the sector since July 2013. The latest reading was below the neutral 50.0 mark for the fifth straight month. A reading below 50 indicates contraction in the activity.
Following the reading, economists at Nomura reiterate their estimates for Chinese central bank monetary policy action.
"Our view on monetary policy remains unchanged. We expect one more 50bp bank reserve requirement ratio (RRR) cut and one more 25bp policy interest rate cut this year. The next move is likely to be a RRR cut in August, in our view," Nomura says.
The People's Bank of China has been easing monetary policy recently to support China's economic growth, which has been slowing and to stop the rout in its equity markets.
HSBC Holdings said that its pretax profit increased by 10% in the first half, as a strong showing in Asia more than offset a USD1.14 billion charge for settlements and provisions in connection to legal matters, and that it has agreed to sell its Brazilian operations to Banco Bradesco for USD5.2 billion.
HSBC reported a USD13.63 billion pretax profit for the six months to the end of June, up from the USD12.34 billion reported for the first half of 2014. HSBC's interim dividend remained at USD0.20 per share. Revenue, defined as net operating income before loan impairment charges and other credit risk provisions, increased to USD32.94 billion from USD31.17 billion.
The results come nearly two months after the global banking giant revealed plans to save between USD4.5 billion and USD5.0 billion per year by 2017, cut risk-weighted assets by a quarter, and redeploy freed up capital to more profitable business, and sell its loss-making operations in Brazil and Turkey.
Fellow FTSE 100 constituent Intertek Group said its pretax profit rose in the first half of 2015 on the back of margin improvements and better revenue.
The company, which provides inspection, testing and certification services, said its pretax profit for the six months to the end of June was GBP139.1 million, up from GBP119.8 million a year earlier, driven by its revenue edging up to GBP1.06 billion from GBP1.02 billion and by an improvement in its margins, with its operating margin up to 14.5% from 12.8% in the half.
BG Group said it has generated the first oil from the Cidade de Itaguaí floating production, storage and offloading vessel in the Santos Basin, offshore Brazil. The FTSE 100-listed oil and gas producer, which is being acquired by bigger rival Royal Dutch Shell, said the vessel is the sixth unit to start production from its Santos Basin discoveries.
In the economic calendar, there are Markit manufacturing PMI readings from France at 0850 BST, Germany at 0855 BST, the eurozone at 0900 BST the UK at 0930 BST and the US at 1445 BST. There are also US personal income, consumption and expenditure data at 1330 BST, before the Institute for Supply Management manufacturing PMI at 1500 BST, alongside US construction spending.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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