MARKET PREVIEW

Market Preview is published daily an hour before trading kicks off on the London Stock Exchange, giving investors a roundup of macroeconomic and corporate news that is likely to move the markets along with the expected opening level of the FTSE 100.

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MARKET PREVIEW: FTSE 100 seen lower after US stocks slump

December 20 2011, 7:01am
MARKET PREVIEW: FTSE 100 seen lower after US stocks slump

UK stocks are expected to open lower today, tracking overnight losses on Wall Street. The FTSE 100 is currently expected to open at 5,356, down 9 points (0.15 percent) from Monday’s close.

The European debt crisis again took centre stage today after president of the European Central Bank (ECB) Mario Draghi said the euro was permanent and irreversible, adding that it would be too costly for the 17-nation monetary union to break up.

However, Draghi again indicated there are no plans for the ECB to step up debt purchases to curb growth in borrowing costs in the euro zone.

Draghi’s statements came a few days after credit rating agency Fitch said it would review the ratings of seven euro zone members including France and stated that a comprehensive solution to the debt crisis was now out of reach.

“With ‘European fatigue’ now having engulfed the market, investors are treading cautiously when it comes to their exposure to risk assets and risk currencies,” said chief market strategist at IG Group Chris Weston.

“This is likely to persist until markets have greater confidence in both banks and sovereign nations to engineer a successful deleveraging of their balance sheets.”

Today, investors will have a raft of German data to digest including the Gfk and the Ifo business climate survey. In the US, traders will be looking to today’s building permits and housing starts data.

On Wall Street, the Dow Jones Industrial Average (DJIA) dropped 100 points (0.85 percent) to end the day at 11,766 and the broader S&P 500 index shed 14.5 points (1.15 percent) to close at 1,205.

Asian stocks were in buying mode today. Japan’s benchmark Nikkei 225 index stood 40 points (0.5 percent) higher at 8,336 and China’s Shanghai Composite Index added 1.5 points (0.1 percent) to reach 2,220.


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