The FTSE 100 was expected to decline today after making big gains in yesterday’s bumper session.
Global trends were behind the change in sentiment, as the Chinese banking regulator voiced concerns about bubbles in overseas markets after New York posted its strongest daily gains in nearly nine months.
Asian stocks fell sharply, as the Chinese stock index reversed its initial gains, dropping more than 1% and the Hong Kong Hang Seng Index falling by similar amounts.
Given this kind of decline, the outlook for the FTSE 100 was relatively optimistic. Traders using the IG platform were calling the market down only 24.3 points to 6,554.9 – a commendable performance after Monday’s 105 point rally.
“I am afraid that the bubble problem will appear in foreign financial markets one day,” said Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, this morning.
He warned of concerns that market gains in the US and Europe were being driven by very low interest rates and quantitative easing that had “seriously skewed” from the real economy.
Frankly, the markets have been worried about the same for a few months now, but for Guo this meant that foreign investment inflows into China, which are currently strong, could abruptly decline if bubbles start to burst, destabilizing the economy. His state.
Wall Street posted strange gains on Monday, with a 2.4% rise in the S&P 500 and a 3% rise in the Nasdaq, resulting from the same drop in government debt yields – interest rates, in regular language – which strengthened the UK yesterday.
Rishi Sunak, the British advisor, is doing his best to keep London markets bullish, as the Financial Times said he will announce in tomorrow’s budget the long-awaited rules for liberalizing UK equity pricing rules.
The idea is to make London more attractive to founders of tech companies by allowing them freedoms such as the ability to float shares listed on a dual exchange allowing them to retain more managerial control to prevent company acquisitions.
London has lost its place to the United States, Asia and Amsterdam when it comes to technology listings and Spacs – the acquisition of special purpose vehicles used to raise money to buy companies.
The proposals will be published in Lord Jonathan Hill’s Review, which will be published with the budget tomorrow.
Australian shares suffered less selling than anywhere else in Asia after the central bank kept interest rates at 0.1% and made clear that it would not raise interest rates until inflation clearly and permanently did not reach 2-3%. Similar statements were made by all Western central bankers as they attempt to manage market expectations to limit bond yields.
Here in Europe, we get a reading of euro-zone inflation later this morning, with economists expecting the rate to remain at 0.9%, although core inflation may fall from 1.1% to 1.4%. German and French government bond yields rose last week on inflation concerns.
Canadian GDP in the fourth quarter is expected to stand at 7.5% compared to 40.5% in the third quarter.
Traders on CMC Markets expect the German Dax to open 44 points at 13938 and the French CAC 40 by 6 points at 5,786.
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