London pre-open: Stocks seen down after two days of gains

25th Sep 2024 07:32

(Sharecast News) - London stocks were set to fall at the open on Wednesday following two days of gains, with China in focus again after another rate cut.

The FTSE 100 was called to open down around 50 points.

Kathleen Brooks, research director at XTB, said: "Another day, another rate cut from China. This time the Chinese authorities cut the 1-year rate by 0.3% to 2%, its largest ever reduction to this rate. This adds to the evidence that this is the PBOC's 'whatever it takes' moment, which could have a lasting effect on China's financial markets and its economy.

"China's stocks are rising once more on Wednesday; however, European futures are taking a breather, and US equity futures are also pointing to a weaker open. However, we continue to think that European shares will welcome the boost to commodity prices and to the increased prospects of a rebound in China's economy.

"China's stimulus measures took financial markets by storm on Tuesday. Commodities and European stock indices surged, especially miners, luxury goods houses and luxury car makers. While some are concerned that the Chinese stimulus package will not remedy China's deflation, there are others who see it as a new era for the Chinese central bank, as it becomes more expansionary and supportive of growth. A Fed rate cut, combined with China stimulus is a powerful force for stocks and other risk assets as we move towards Q4."

In corporate news, property platform Rightmove said it has rejected a third takeover offer from Australian outfit REA Group, saying it "materially undervalues the company and its future prospects".

REA's latest cash-and-shares proposal, equivalent to an offer price of 759p, was a 37% premium to Rightmove's share price on 30 August, the day before the first offer.

However, as Rightmove pointed out, since that time REA's own share price has dropped by 12%, essentially bringing the offer price down.

LondonMetric Property said it had bought six single let urban UK logistics properties for £78m from an unnamed FTSE 100 pension fund.

The portfolio generates income of £4.8m a year, which is expected to rise to £5.8m over the next two years, the company said.

IG Group announced the start of the second tranche of its share buyback programme, with a maximum value of £75m, expected to conclude by 31 January.

The FTSE 250 company said the tranche was part of a broader £150m programme aiming to reduce share capital by purchasing shares to be held in treasury.

It said the buyback was being conducted by UBS, under the authorisation granted by the resolution passed at its recent annual general meeting.