LONDON (Alliance News) - UK stocks are set to open lower Tuesday, a weak start to the month of September after a volatile August, with investors focusing on purchasing manager's indices from several countries including the UK and the US, after a weak PMI reading from China.
IG says futures indicate the FTSE 100 to open 141 points lower at 6,106.60. The index closed Friday up 0.9% at 6,247.94, before a bank holiday on Monday.
Markit manufacturing PMIs for Germany and the eurozone are expected at 0855 BST and 0900 BST, respectively, while Markit manufacturing PMI for the UK is due at 0930 BST.
Oanda senior market analyst Craig Erlam believes the UK data is expected to be unchanged from last month at 51.9.
"This marks a significant slowdown in growth from mid-2013 to mid-2014, but that was coming from a much lower base, and while it has slowed, we are at least continuing to good growth numbers in the PMIs," the analyst says. "This is also against the backdrop of challenging conditions including slow growth in the UKs largest export market and a strong pound which negatively impacts the UK's competitiveness."
In Asia on Tuesday, the Japanese Nikkei 225 closed down 3.8%. In China, the Hang Seng trades down 0.8% and the Shanghai Composite is down 2.1%.
The manufacturing sector in China contracted at a faster rate in August, the latest survey from Caixin revealed on Tuesday, as its PMI hit a six-year low reading of 47.3.
That's higher than last month's flash estimate of 47.1, but it's down sharply from 47.8 in July. It also moves further beneath the line of 50 that separates expansion from contraction. Caixin also said its services PMI sank to 51.5 from 53.8 in July, while its composite index fell to 48.8 from 50.2.
Wall Street ended lower Monday, in the wake of US Federal Reserve Vice Chairman Stanley Fischer's comments at the Jackson Hole symposium in Wyoming. On Saturday, the Fischer left the door open to a US interest rate hike in September, at a time when most analysts had started to believe that a change in the US monetary policy would be delayed until later in the year, as a consequence of concerns about economic growth in China.
Fischer said the Fed should not wait until US inflation reaches its 2% goal to begin increasing rates. He added that here were good indications that inflation would rise. He also said US central bankers were looking at the international situation, particularly developments in China, as they consider their next move.
"We need to consider the overall state of the US economy as well as the influence of foreign economies on the US economy as we reach our judgement on whether and how to change monetary policy," he said.
The DJIA closed Monday down 0.7%, the S&P 500 ended down 0.8% and the Nasdaq Composite finished down 1.1%.
On Tuesday, the Markit manufacturing PMI for the US is due at 1445 BST, while the US ISM manufacturing PMI is due at 1500 BST.
On the UK corporate front, satellite communications company Inmarsat confirmed the successful orbit of the third satellite in its Global Xpress constellation. The FTSE 100 company said the Inmarsat-5 F3 was launched from the Baikonur Cosmodrome in Kazakhstan on Friday and entered orbit on Monday morning.
Shares in Inmarsat ended up 3.5% on Friday after the successful launch of the satellite in Kazakhstan.
Bwin.Party Digital Entertainment said it has now received a revised takeover bid from 888 Holdings, as the latter attempts to ward off the continued attempts to derail its deal with Bwin.Party by smaller rival GVC Holdings.
FTSE 250-listed Bwin.Party said it is now evaluating the new 888 proposal, in addition to the one it has received from GVC Holdings, and will consult with key shareholders in coming days before making a decision which bidder to go with. It said its unanimous recommendation of 888's previous offer remains unaffected by the ongoing talks. Bwin.Party didn't state the value of 888's new offer.
Meanwhile, business services company Rentokil Initial said it has agreed a USD425.0 million deal to acquire US-based pest control company The Steritech Group. FTSE 250-listed Rentokil said the deal will strengthen its position as the third-largest pest control services provider in the US market and will make it the third-largest player in the Canadian market.
The purchase of Charlotte, North Carolina-based Steritech means Rentokil's North American operation now generated revenue of USD800 million per year and is its largest division. It comes following the agreement struck by Rentokil on Friday to acquire Chicago-based Anderson Pest Solutions.
HSBC has raised Royal Dutch Shell to Buy from Hold, according to traders, while the bank also has upgraded BG Group to Buy from Hold.
Also in Tuesday's economic calendar, UK mortgage approvals are due at 0930 BST. In the US, the Redbook index is due at 1355 BST, while US construction spending is due at 1500 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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