LONDON (Alliance News) - UK shares were set to open lower Tuesday, with German and US economic data in focus, while Chinese major indices traded again lower after Monday's sell-off.
In Asia on Tuesday, the Japanese Nikkei 225 traded down 1.6%. In China, the Hang Seng traded down 0.66% and the Shanghai Composite down 5.6%. Asian stock markets have rebounded from early losses, as a rise in US stock index futures during Asian trade helped soothe investor sentiment.
China's central bank said it will inject more money into the country's markets, as it also set its currency fix slightly weaker following the three-day devaluation which drove the value of yuan down last week. The People Bank of China set Tuesday's central parity rate for yuan at 6.3987 per dollar, compared to Monday's reference rate of 6.3862. The central bank sets the reference rate every morning and allows the currency to move upto 2% from that level.
In addition, the bank said it will inject CNY150 billion via 7-day reverse repos, a decision which should also help to underpin some improved sentiment in Asian markets, according to Bloomberg.
Lloyds Bank said the German IFO business survey for August will be the main economic data focus in the morning session.
"It will provide a timely guide to economic activity in the current quarter, especially in light of recent global economic developments, including the slowdown in China and the correction in equity prices," said the bank. "We look for a fall in the headline index to 107.6 from 108.0, in line with the market consensus."
IG said futures indicate the FTSE 100 to open 1 point lower at 5,897.8. The index fell 4.7% on Monday at 5,898.87 points, in its tenth consecutive session without a gain.
Meanwhile, US Federal Reserve official Dennis Lockhart repeated his view that the US central bank could raise its key interest rate this year, the Financial Times reported. Lockhart, in a speech made on Monday in California, said the Atlanta Federal Reserve's baseline forecast "is for moderate growth with continuing employment gains and a gradually rising rate of inflation."
"Consistent with this picture, I expect the normalisation of monetary policy - that is, interest rates - to begin sometime this year," he added. "I expect normalisation to proceed gradually, the implication being an environment of rather low rates for quite some time."
Wall Street ended lower Monday. The DJIA closed down 3.6%, the S&P 500 ended down 3.9% and the Nasdaq Composite finished down 3.8.
In the US, new home sales and consumer confidence will be the key releases Tuesday, both expected at 1500 BST.
"Both indicators are expected to rebound, following surprising weakness in their respective prior months," said Lloyds. "We look for new home sales to rise to around 500k in July from 482k in June and for consumer confidence to edge up to 91.4 in August from 90.9 in July."
In the corporate calendar Tuesday, Antofagasta, Petrofac, Regus, Polymetal International, Al-Noor Hospitals Group and James Fisher & Sons report half-year results. BHP Billiton publishes full-year results at 0730 BST.
Also in the economic calendar, German Gross Domestic Product is due at 0700 BST. In the US, the Redbook index is due at 1355 BST, and US Markit services and composite purchasing manager's indices are due at 1445 BST. New home sales are expected at 1500 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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