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London open: Stocks drop following declines in Asia, US
UK stocks dropped on Wednesday following declines in Asian and US markets.
Asian equities closed sharply lower after a sell-off on Wall Street as concerns about falling oil prices continued to weigh on sentiment.
Oil prices have been under pressure on the dimming prospect of an OPEC deal to curb the supply glut in the market.
At 0854 GMT oil recovered slightly, with Brent up 0.6% to $32.94 per barrel and West Texas Intermediate up 0.8% to $30.15 per barrel.
“This fresh bout of oil price weakness appears to have been driven by the very same concerns that drove the decline in the first part of last week, namely the distant prospect of any sort of OPEC deal to cut back on production, meaning that prices are likely to remain lower for longer, and it is these worries as well as ripple out effects that appear to be causing most market angst,” said Michael Hewson, chief market analyst at CMC Markets.
In economic data, Caixin’s purchasing managers’ index on China services rose to 52.4 in January from 50.2 the previous month.
Markit releases its PMI on UK services at 0930 GMT, with analysts expecting a slowdown in sector activity growth.
The US will also see services data from Markit and ISM at 1445 GMT and 1500 GMT, respectively.
Also on the macroeconomic front, Eurozone retail sales are due at 1000 GMT and US weekly mortgage applications at 1200 GMT.
In company news, Hargreaves Lansdown shares fell despite the company reporting a 10% increase in revenue and a 6% rise in pre-tax profit for the first half.
Cruise operator Carnival declined following disappointing results from rival Royal Caribbean Cruises and amid fears over the Zika virus.
Insurance giant Prudential rebounded from the previous day’s declines after China’s financial regulator launched a crackdown on citizens buying insurance overseas.
