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London open: Stocks fall amid China concerns
UK stocks fell for a second day on Tuesday amid concerns about China and low commodity prices.
A report on Monday showing an 8.8% fall in Chinese industrial profits, added to woes about the nation’s slowdown. The market is now awaiting the release of manufacturing and services data on Wednesday.
“It still remains far from clear how weak or otherwise economic conditions in China are, but the weakness of the manufacturing sector remains a real concern,” said Michael Hewson, chief market analyst at CMC Markets.
Glencore’s debt fears also dragged on stocks early in the week after Investec highlighted there was little equity value for shareholders and that commodity prices are in trouble.
“None of the major mining companies could avoid the chaos of the panic selling, and it will be a long time before confidence is restored,” said IG market analyst David Madden.
However, stocks in the company rebounded on Tuesday along with other miners.
Turning to Tuesday’s agenda, a report on UK mortgage approvals is due at 0930 BST.
German inflation is due at 1300 BST with analysts expecting a 0.1% rise in September compared to a year ago, slowing from the previous month’s 0.2% growth. The European Central Bank has said it would consider extending its quantitative easing programme if inflation fails to move back towards its target of just under 2%.
The US consumer confidence index at 1500 BST is forecast to reveal a fall to 96 in September from 101.5 in August, amid concerns about the potential impact the slowdown in China’s economy will have on the US.
In company news, Wolseley was the top faller after reporting a drop in pre-tax profits by £168m to £508m reflecting impairment and exceptional items of £242m and increased finance charges of £48m.
Wizz Air gained after saying it was on target to deliver full-year operating and net profit margins ahead of the same period last year.
