LONDON (Alliance News) - UK stocks are set to open lower Tuesday following another day of heavy falls in the US equity markets and ahead of the latest UK inflation data, as well as the German ZEW economic sentiment survey.
Futures indicate that the FTSE 100 will open 30 points lower at 6,336.
UK stocks had a mixed session on Monday, with large caps outperforming small as investors continue to de-risk their portfolios amid concerns over the health of the global economy, as well as the spread of the Ebola virus.
US stocks went on to suffer another day of heavy falls, with the DJIA shedding 1.4%, the S&P 500 dropping 1.7%, and the Nasdaq Composite falling 1.5%. As the US earnings season starts to hit its stride Tuesday, with the first of the big banks reporting, commentators have noted that this is the first time since 2009 Wall Street has suffered significant declines ahead of the numbers.
The Nikkei suffered a huge 2.5% fall Tuesday, hurt by deteriorating global sentiment and a rallying yen, as well as reports of disruption as Typhoon Vongfong rips through Japan. Japan was closed for a holiday Monday, so Tokyo also is catching up on Monday's global market losses. The Hang Seng and Shanghai Composite are performing better, but are still slightly lower.
Investors continue to have one eye on events in Hong Kong, where police have been cutting down bamboo barricades with chainsaws to clear a route for traffic, as hundreds of pro-democracy demonstrators continued a third week of protests in the Chinese territory.
With equity markets around the world suffering a significant correction, many commentators have pointed to a recent increase in the Chicago Board Options Exchange Market Volatility Index, often referred to as the "VIX fear index" because it is seen as a measure of nervousness in the market. The index reached its highest level since 2012 on Monday.
Given the recent focus on the deteriorating health of the European economy, the German ZEW survey for October will be in focus Tuesday when it is released at 1000 BST. The clear expectation is for a fall to near-zero for the economic sentiment reading, from 6.9 recorded in September. Eurozone industrial production data released at the same time will also be closely watched, while French and Italian consumer price inflation data released ahead of that at 0745 BST and 0900 BST are likely to make for ugly reading.
Domestically the data focus Tuesday is September consumer price inflation and retail sales, due at 0930 BST. UK CPI is expected to slow slightly to 1.4% year-on-year in September, from 1.5% previously, with the core reading also slipping to 1.8% from 1.9%.
Retail sales growth is also seen as slowing slightly to 2.3% year-on-year in September, from 2.4% in August.
A number on clothing retailers including Next and N Brown group have warned recently that the warm UK weather that lasted into October impacted on the sales of their autumn collections. Luxury brand Burberry has released a second quarter trading statement Tuesday but hasn't mentioned the same issue. A lot of Burberry's sales are in other countries, especially in Asia, however, which has previously given it the problem of the strength of the pound. The group said revenue was up by 14% in the first half, and also that the currency headwinds have reduced, which will not be a surprise given that the pound had lost some 6% against the dollar over the last quarter.
Updates are also out Tuesday from beverages giant SABMiller, investment group Hargreaves Lansdown, housebuilder Bellway, and flooring company Carpetright.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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