LONDON MARKET EARLY CALL: China Covid worry hits stock and oil prices

LONDON MARKET EARLY CALL: China Covid worry hits stock and oil prices

Updated: 4 months, 6 days, 9 hours, 35 minutes, 45 seconds ago

(Alliance News) - Stocks in London are set to open lower on Monday, with Covid-19 worries in China hitting the mood at the start of what is expected to be a quiet week for equity market trading.

Financial markets in New York are closed on Thursday for the Thanksgiving Day holiday in the US. Equity markets there re-open for a half-day on Friday. Trading volumes are expected to be low as a result.

IG says futures indicate the FTSE 100 index of large-caps to open 13.3 points, or 0.2%, lower at 7,372.22 on Monday. The FTSE 100 index ended 38.98 points, 0.5%, higher at 7,385.52 on Friday.

The dollar started the week on the front foot.

The pound was quoted at USD1.1827 early Monday in London, down a full US cent from USD1.1929 late Friday. The euro traded at US1.0278, down from USD1.0362. Against the yen, the dollar was quoted at JPY140.70, up from JPY139.85.

Downing Street has labelled as "categorically untrue" a report that Prime Minister Rishi Sunak's government is considering putting the UK on the road to a Swiss-style relationship with the EU.

The Sunday Times had said the move could take place over the next decade as the government eyes up a closer relationship with the EU that avoids the current barriers to trade.

A government spokesperson said: "This government is focused on using our Brexit freedoms to create opportunities that drive growth and strengthen our economy. Brexit means we will never again have to accept a relationship with Europe that would see a return to freedom of movement, unnecessary payments to the EU or jeopardise the full benefit of trade deals we are now able to strike around the world."

In China on Monday, the Shanghai Composite index was down 0.5%, while the Hang Seng in Hong Kong slid 1.8%.

"Asia risk turned sour after news of lockdowns in several major cities in China," SPI Asset Management analyst Stephen Innes commented.

China reported the death of an 87-year-old man in Beijing on Sunday as its first fatality from Covid-19 in six months, with cases rising despite a stringent zero-Covid policy.

Municipal officials announced on Sunday the 87-year-old man had died in the capital. They also said 621 new local cases had been detected in Beijing.

The National Health Commission also said it had recorded more than 24,000 local infections across the nation in the previous 24 hours.

While the tallies are low compared with most other countries, the latest announcements follow a recent uptick in cases in China after months of few infections being reported.

The number of cases "is seeing a significant rise", Beijing municipality spokesman Xu Hejian said Sunday.

As a big energy consumer, China's Covid worries also hit oil prices. Brent oil was trading at USD86.95 a barrel early Monday in London, down USD87.30 on Friday.

China's central bank on Monday left its benchmark lending rate unchanged, an outcome in line with market expectations.

The People's Bank of China held its one-year loan prime rate - which serves as a benchmark for corporate loans - at 3.65%. The five-year rate remained at 4.3%.

In Tokyo, the Nikkei 225 edged up 0.2%, while the S&P/ASX 200 in Sydney slipped 0.2%.

The Japanese government was in turmoil at the start of the week.

Japan's internal affairs minister resigned Sunday over a series of campaign finance scandals, becoming the third member of Prime Minister Fumio Kishida's cabinet to step down in less than a month.

Minoru Terada quit over allegations of mismanagement of political funds. He had acknowledged to Parliament that his local campaign group had even listed a dead person as its treasurer in annual financial statements.

Gold was quoted at USD1,745.61 an ounce early Monday, down from USD1,757.30 on Friday.

Eyes will be on Disney shares when markets in New York open later Monday. Disney ousted chief executive Bob Chapek on Sunday and announced that it had brought back former CEO Bob Iger to once again take the reins.

The change, a dramatic turn of events for the world's largest media company, was effective immediately, Disney said in a statement.

Chapek spent two years as CEO, a period that saw Wall Street concerned about rising expenses at the company. Disney's stock has fallen 41% this year.

Iger, who served as Disney's CEO for 15 years, increasing the company's market capitalization five-fold during that period, has pledged to return as CEO for at least two years, the statement said.

Still to come on Monday's economic calendar is producer price data from Germany at 0700 GMT.

Monday's London corporate calendar has annual results from contract caterer Compass and specialised technical products and services provider Diploma.

By Eric Cunha; [email protected]

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