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FTSE down as Asian markets struggle

Asian market trouble has dented optimism sending the FTSE 100 down 21 points in the first hour of trading.

Japan flag
Source: Bloomberg

Japan's problems are far greater than markets had assumed and the likelihood of snap elections has taken a step closer. Vladimir Putin’s presence and early departure from this weekend's latest G20 summit ensured that sentiment was already frosty before this disappointment. After a decade of discussions Australia has been able to finally agree a 'free' trade agreement with China, ensuring that up to 95% of trade between the two nations is now tariff free.

The stalling eurozone’s importance to the UK needs no clearer example than the fact that a far greater proportion of city time is spent analysing what goes on across the channel rather than here. As such, this afternoon's speech by European Central Bank president, Mario Draghi, will once again be scrutinised as much in London as Brussels.

Not that Serco needs any more bad news but chairman Alastair Lyons has announced that he will be falling on the sword of the company’s 30% share price fall. As admirable as this action might be it is hard to see how in the short-term this will help the company turn around the flood of profits warnings it has had to issue.

Mike Ashley's thick skin is once again being tested, this time by Labour leader Ed Miliband's barbs over Sports Direct's use of zero-hour contracts.

In contrast to the enthusiasm that the rest of the pharmaceutical sector has for acquisitions, Reckitt Benckiser has moved closer to stripping off this department in a demerger that should be completed before the end of the year.

Global sentiment has taken a turn for the worse over the last week and rather than the plethora of sound bite-friendly, empty promises that we have become accustomed to the focus was disproportionately on sanctions against G20 member Russia. Today’s US monthly industrial production figures along with capacity utilisation should offer the opportunity for traders to focus back on the US. 

Ahead of the open we expect the Dow Jones to start 52 points lower at 17,582.  

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