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London pre-open: Stocks seen lower as Sino-US worries resurface

By Michele Maatouk

Date: Wednesday 20 Mar 2019

London pre-open: Stocks seen lower as Sino-US worries resurface

(Sharecast News) - London stocks were set for a downbeat open on Wednesday amid fresh concerns about Sino-US trade relations and as investors eye the latest policy announcement from the Federal Reserve.
The FTSE 100 was called to open 35 points lower at 7,289.

Sentiment was expected to be fragile following a report from Bloomberg overnight that China was pushing back against key US demands in the trade talks ahead of the next round of negotiations in Beijing next week.

Bloomberg cited people familiar with the negotiations as saying that Chinese officials have shifted their stance because after agreeing to their intellectual property policies, they haven't had any assurances from the Trump administration that tariffs on their imports would be lifted.

London Capital Group analyst Jasper Lawler said: "Reports that US-Sino trade talks are turning sour is hitting sentiment. Hopes that a trade deal would be signed by March had already been pushed back to April and now even June. Suddenly a trade deal, which had looked imminent, is now months away if it can be agreed at all.

"US trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin plan to travel to China next week for further talks with China's Vice Premier Liu He. This should offer some support to riskier assets capping any selloff. If the two sides are still talking, there is still hope of a deal."

Market participants will also be keeping an eye out for the Fed rate announcement, which is due after the London close at 1800 GMT.

Konstantinos Anthis, head of research at ADSS, said: "There are three main points of interest today: the Fed's dot plot, their inflation and growth projections and Powell's press conference. Starting with maybe the most important of the three, the dot plot chart is the main way the Federal Reserve policymakers express their expectations in regards to future interest rates. Back in December, the Fed updated their dot plot to project two rate hikes in 2019 but this is widely expected to change today.

"The Fed will most likely change their expectations to project one move in 2019 while the markets are currently pricing in no rate hikes this year, or even a rate cut, as seen on the Fed fund futures. Given market participants' expectations, a reduction from two expected hikes to one this year will not catch investors' off guard but still the dollar should respond with an initial move lower."

On UK the data front, the retail price, producer price and consumer price indices are due at 0930 GMT.

In corporate news, profits at Kingfisher last year fell less than expected as the DIY retailer completed the third year of its five-year turnaround plan.

The search for a new chief executive to take over from Véronique Laury has begun but a departure date has not yet been decided.

TI Fluid Systems reported revenue growth of 2.0% year-on-year at constant currency in its final results, with profit for the year growing by €24.9m to €140.1m.

The FTSE 250 firm said that, having executed its hybrid electric vehicle and electric vehicle strategy, adjusted net income was up 14.1% to €155.2m with adjusted basic earnings per share standing at 29.9 euro cents. Its board proposed a final dividend of 5.94 cents per share.

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