LONDON MARKET EARLY CALL: Flat Start Seen Ahead Of Powell Testimony

(Alliance News) - Stocks in London are set to open flat on Wednesday as investors await remarks ...

Alliance News 10 July, 2019 | 6:52AM
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(Alliance News) - Stocks in London are set to open flat on Wednesday as investors await remarks from the head of the US central bank in front of Congress later in the day.

IG says futures indicate the FTSE 100 index of large-caps to open 2.13 points higher at 7,538.60 on Wednesday. The FTSE 100 index closed down 12.80 points, or 0.2%, at 7,536.47 on Tuesday.

Stocks are called for a flat start ahead of US Federal Reserve Chair Jerome Powell's testimony before the House Financial Services Committee.

"He is expected to keep the possibility of an interest rate cut on the table despite the latest rebound in US nonfarm payrolls data," said Ipek Ozkardeskaya, senior market analyst at London Capital Group.

"US policymakers will likely question the Fed's action plan beyond its July meeting, when it is expected to lower the interest rates by 25 basis points," Ozkardeskaya continued. "Powell may well leave the door open for further rate cuts, without however precising when and by how much. This is the beauty of the 'act as appropriate' formula."

Powell appears in front of Congress starting at 1500 BST. Later, at 1900 BST, minutes from the latest Federal Open Market Committee meeting are released.

In the US on Tuesday, Wall Street ended mostly in the green, with the Dow Jones Industrial Average ending down 0.1% but the S&P 500 and Nasdaq Composite closing up 0.1% and 0.5% respectively.

In Asia on Wednesday, the Japanese Nikkei 225 index is flat. In China, the Shanghai Composite is also unchanged, while the Hang Seng index in Hong Kong is up 0.4%.

China's consumer price index rose 2.7% for June on the year before, the same level of growth registered year-on-year in May. Food prices climbed 6.1%, led by a 21% jump in the price of pork, as China grapples with an African swine fever epidemic.

China's producer price index was flat in June year-on-year, the weakest print since August 2016. In May, factory prices climbed 0.6% year-on-year.

To come in the economic calendar, UK manufacturing and industrial production, alongside a GDP reading for May, is due at at 0930 BST. Irish inflation is at 1100 BST.

In the UK corporate calendar on Wednesday, there are trading statements from housebuilder Barratt Developments, recruitment firm PageGroup and pub operator JD Wetherspoon. There are also annual results from struggling clothing retailer Superdry.

Last night in the UK, Boris Johnson was forced to defend his plans to cut taxes for high earners in a fractious TV debate with rival Jeremy Hunt.

The Foreign Secretary accused Johnson, the favourite in the battle for the Tory leadership, of sending out a signal that the Conservatives were a "party of the rich".

The ITV debate was the public's first chance to see the two men fighting to become the next prime minister go head-to-head. However, Tory members have already received their postal ballots and Hunt had pleaded with them not to vote until after a chance to see the two candidates in action in the TV debate.

They have until July 22 to cast their vote, with the new Tory leader announced the following day. Either Johnson or Hunt will take over from Theresa May as prime minister on July 24.

By Lucy Heming; lucyheming@alliancenews.com

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