The UK benchmark index looks set to start the new week little changed, following the previous session’s hefty losses, following a slump in Asia. In company news, bailed-out lender Royal Bank of Scotland Group (LON:RBS) could change its name to repair its corporate identity.
IG’s opening calls suggest that the Footsie will start the session flat at 7,319 points. Asian shares have posted a hefty fall this morning as the People’s Bank of China cut the reserve requirement for banks over the weekend.
“We expect the PBoC will continue its easing efforts to keep liquidity ample and loosen its credit control to make funds more accessible to the broader economy,” BofA Merrill Lynch analysts said in a note, as quoted by Reuters. “Moreover, there is still room for further RRR cuts when necessary, though the chance for an interest rate cut is limited given the continued Fed rate hiking cycle, in our view.”
In the US, shares fell on Friday, as investors digested the latest non-farm payrolls report which showed that the US economy had added fewer jobs than expected last month, while the unemployment rate fell to its lowest level since 1969.
“The labour market is going to keep getting tighter and that will mean higher wages,” said Peter Cardillo, chief market economist at Spartan Capital Securities, as quoted by CNBC. “This is going to keep upward pressure on rates and continue to put downward pressure on stocks.”
In the UK, the Footsie tumbled on Friday, giving up 99.80 points to close 1.35 percent lower at 7,318.54.
There are no major macroeconomic releases out of Europe to guide the markets further this morning. In corporate news, RBS’ chairman has told The Times that the bailed-out lender is considering ditching its corporate name after suffering severe reputational damage from the financial crisis and ten years of painful restructuring. Reuters meanwhile reports that Lloyds Banking Group (LON:LLOY) and Schroders (LON:SDR) have said that they are in discussions over a wealth management alliance.