LONDON (Alliance News) - UK stocks are set to open fractionally lower Monday, as the boost provided by the unexpected announcement last week of extra monetary stimulus from the Bank of Japan is tempered by concerns over Chinese growth, after PMI data showed tepid growth in the world's second largest economy.
Futures indicate that the FTSE 100 will open 6 points lower at 6,540.
Stocks made strong gains across Asia, Europe, and the US on Friday after the Bank of Japan unexpectedly announced an accelerated expansion of its monetary base, something that was particularly warmly welcomed by the market as it appeared to go some way to filling the gap being left by the Federal Reserve in the US, which just two days earlier announced the end of it's own quantitative easing programme.
US markets went on to make record highs in the wake of the announcement by the BoJ, with the DJIA, S&P 500, and the Nasdaq Composite all up more than 1% on the day.
Some less encouraging data from China over the weekend has led to a more cautious Asia session Monday, with the Hang Seng continuing to trade down 0.3%, and the Shanghai Composite up 0.3%, while the Nikkei is closed for the Japan's Culture Day holiday.
China's non-manufacturing business activity expanded at a slower rate in October, data from the National Bureau of Statistics showed Monday. The non-manufacturing business activity index decreased to 53.8 in October from 54 in September, indicating the slowest rate of growth since January.
PMI data will remain the key focus into the European session, with Markit manufacturing sector readings out from across the eurozone throughout the morning. The French manufacturing industry is expected to remain firmly in contraction with a reading of 47.3 forecast at 0850 GMT, while the German print is expected at 51.8 at 0855 GMT. A modest expansion is expected from the eurozone as a whole, with a print of 50.7 forecasts for release at 0900 GMT.
The same data also is due from the UK Monday, with economists expecting a modest slowing of growth in the UK manufacturing sector. A PMI print of 51.2 in expected for October, down from 51.6 in September. The UK construction and services PMI's are scheduled to follow this week on Tuesday and Wednesday, respectively.
From the UK corporate calendar Monday, HSBC is the last of the big banks to report its third-quarter numbers, which are scheduled for release at 0815 GMT. The theme of the quarter for the big banks has been an improvement in underlying earnings, but coupled with large provisions for the payment of mis-sold payment protection insurance, as well as benchmark rigging investigations. Investors will be keen to find out HSBC's current leverage ratio, after the UK financial regulator unveiled new requirements for the measure on Friday that were seen as less stringent than expected.
An interim management statement from Just Eat has been released Monday, with the takeaway ordering service reporting a 56% year-on-year increase in third quarter orders. Gaming group Betfair also has released a trading statement, while software company Telecity Group has reported third quarter numbers.
Airlines may be in focus at the open after Ireland's Ryanair reported a strong first half, with traffic up 16% and average fares up 5.0%.
From the US later in the session, the Markit manufacturing PMI and the ISM Manufacturing PMI for October will be released at 1445 GMT and 1500 GMT respectively, while construction spending data for September is also due at 1500 GMT.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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HSBC Holdings (HSBA)