LONDON (Alliance News) - UK stock futures turned higher ahead of the London open Tuesday, having previously pointing toward a slightly lower open, following Monday's sell-off in Asian stock markets that weighed on shares around the world.
In Asia on Tuesday, the Japanese Nikkei 225 closed down 3.6%. In China, the Hang Seng traded down 1.0% and the Shanghai Composite down 6.9%. Asian stock markets have rebounded from early losses, as a rise in US stock index futures during Asian trade helped soothe investor sentiment. Concerns over slowing growth in China had spurred panic selling across the Asian region on Monday, prompting many to term it "Black Monday".
After the declines seen in stocks on Monday, 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 up to 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.
IG said futures indicate the FTSE 100 to open 85 points higher at 5,983.80. The index fell 4.7% on Monday at 5,898.87 points. It was 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."
CMC Markets Chief market analyst Michael Hewson commented: "His imprecision about the timing of such a move, given his comments earlier this month, would appear to suggest that he may be moving away from his earlier view of this month, and that the bar may well have moved enough to defer his decision."
Lockhart had said earlier this month that a rate hike in September could be "appropriate".
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 Bank. "We look for new home sales to rise to around 500,000 in July from 482,000 in June and for consumer confidence to edge up to 91.4 in August from 90.9 in July."
In the UK Tuesday, RSA Insurance said it has received a revised takeover offer from Swiss rival Zurich Insurance Group. The bid is for 550.00 pence per share, or GBP5.59 billion in total, and would allow RSA shareholders to get the 3.5 pence per share dividend RSA announced in its interim results earlier this month. RSA shares closed Monday at 495.00p.
RSA said the takeover offer is conditional on due diligence and the board recommending the bid, but the insurer said it has indicated that it would be willing to recommend Zurich's offer subject to satisfaction of all relevant parts of the bid.
Antofagasta reported a huge fall in profit and earnings in the first half of the year, as expected, and cut its dividend, after being hit by lower production, sales and commodities prices. The FTSE 100-listed miner reported a dramatic fall in pretax profit to USD297.3 million in the first half of 2015 from a USD820.8 million profit a year earlier, as revenue declined to USD1.78 billion from USD2.60 billion.
Earnings before interest, tax, depreciation and amortisation dropped to USD561.6 million, just over half the USD1.09 billion reported a year earlier. That was slightly below analyst expectations, which expected Ebitda to be around USD594.0 million according to a consensus. As a result of the decline in earnings and in line with its dividend policy, Antofagasta slashed its interim dividend to 3.1 cents per share, compared to 11.7 cents a year earlier.
According to traders, Investec raised Regus to Buy from Hold, and Barclays cut Home Retail Group to Underweight from Equal Weight. Traders also said HSBC cut Stagecoach Group to Hold from Buy, while the bank upgraded National Express Group to Buy from Hold.
Still in the economic calendar, 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.
By Daniel Ruiz; danielruiz@alliancenews.com
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