LONDON MARKET EARLY CALL: Stocks called higher despite China worries

(Alliance News) - Stocks in London are set to open slightly higher on Tuesday as unrest in the world's second largest economy continued.

IG says futures indicate the FTSE 100 index of large-caps to open 21.78 points higher on Tuesday, or 0.3%, at 7,495.80. The FTSE 100 index closed down 12.65 points, or 0.2% at 7,474.02 on Monday.

China's major cities of Beijing and Shanghai were blanketed with security in the wake of nationwide rallies calling for political freedoms and an end to Covid lockdowns.

The country's leadership is facing a wave of protest not seen in decades, fuelled by anger over the unrelenting lockdowns as well as deep-rooted frustrations over China's political direction. And with police cars, foot patrols, a network of surveillance cameras, and aided by the icy wind, Beijing authorities also appeared to have deterred fresh gatherings.

In semi-autonomous Hong Kong, however, where mass democracy protests erupted in 2019, dozens gathered at the Chinese University to mourn the victims of the Urumqi fire. The demonstrators said Covid restrictions were to blame for hampering rescue efforts of the deadly fire.

In Asia on Tuesday, stocks were trading sharply higher after Monday's sell-off.

The Japanese Nikkei 225 index was down 0.5%. In China, the Shanghai Composite was up 2.3%, while the Hang Seng index in Hong Kong was 3.7% higher. The S&P/ASX 200 in Sydney closed up 0.3%. 

In the US on Monday, Wall Street ended fully in the red amid a strong risk-off sentiment due to the scenes in China. The Dow Jones Industrial Average closed down 1.5%, the S&P 500 down 1.5% and the Nasdaq Composite down 1.6%.

Bloomberg reported on Monday that Apple will suffer an iPhone production shortfall of six million units due to turmoil at a key facility in China.

Bloomberg, citing a personal familiar with assembly operations, said the outcome will depend on how fast Foxconn Technology can get workers back to production lines after a wave of Covid-19 curb protests.

Foxconn assembles iPhones at a facility in Zhengzhou, China. Apple shares closed down 2.6% on Monday.

Hawkish words from St Louis Federal Reserve President James Bullard also pushed US markets lower and stalled the strength of the US dollar despite the risk-off sentiment.

James Bullard said markets are underestimating the chances that US central bankers may enact more chunky rate hikes next year to tame inflation, Bloomberg reported on Monday.

Bullard affirmed that he believes the Federal Reserve will need to lift the federal funds rate to at least the bottom of a 5% to 7% range. The benchmark rate is currently 3.75% to 4.00%.

Sterling was quoted at USD1.2007 early Tuesday, lower than USD1.2025 at the London equities close on Monday.

The euro traded at USD1.0376 early Tuesday, flat against USD1.0377 late Monday. Against the yen, the dollar was quoted at JPY138.38, down versus JPY138.89.

Gold was priced at USD1,754.60 an ounce early on Tuesday, sharply higher than USD1,743.16 on Monday.

Brent oil was trading at USD85.24 a barrel early Tuesday, higher than USD82.84 late Monday.

In Tuesday's corporate calendar in London, low-cost airline easyJet and tile retailer Topps Tiles will report their full-year results.

In the economic calendar on, there is a provisional CPI reading from Germany at 1300 GMT.

By Heather Rydings; [e-mail]

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