(Alliance News) - Stock prices in London are seen opening higher on Wednesday rebounding from losses on Tuesday that followed a suggestion that US interest rates might need to be hiked, as investors look ahead to a busy day of economic data.
IG futures indicate the FTSE 100 index is to open 30.63 points higher at 6,953.80. The blue-chip index closed down 46.64 points, or 0.7%, at 6,923.17 on Tuesday.
In Asia, the Hang Seng index in Hong Kong was down 0.5% on Wednesday. Financial markets in Japan were closed for Children's Day. The market in Shanghai remained shut for Labor Day, reopening on Thursday. The S&P/ASX 200 in Sydney closed up 0.4%.
European and US equity markets mostly fell Tuesday, with the Nasdaq slumping on valuation concerns after US Treasury Secretary Janet Yellen said interest rates could rise.
The Dow Jones Industrial Average closed up 0.1%, but the S&P 500 and Nasdaq Composite ended down 0.7% and 1.9% respectively Tuesday.
Yellen, in a pre-recorded conversation with The Atlantic, said US lending rates may have to increase "somewhat" to keep a lid on inflation if President Joe Biden's latest spending proposals are enacted and the economy heats up.
The remarks added to pressure on stocks, especially the tech-rich Nasdaq, which has prospered during the pandemic due to the Federal Reserve's policy of near-zero interest rates.
Investors have been concerned about the risk of higher inflation and a sudden shift in Federal Reserve policy to combat it.
However, Yellen later clarified the comments and said she was not predicting nor suggesting the Fed tighten rates, which tempered losses on the S&P 500 and helped the Dow end slightly higher. But the Nasdaq still ended sharply down.
"When markets start to struggle to move higher on good news, as we saw last week, it usually doesn't take too long before they rollover and head lower, which appears to be what happened yesterday, though the selloff was predominantly tech driven in nature. The fact remains the economic data is only likely to improve, something we knew last week, and any by-product of that is likely to mean the prospect of either tighter monetary policy rates in one shape or another, at some point, with the only question being one of timing," commented CMC Market analyst Michael Hewson.
"With US markets closing off their lows, today's European market opens is likely to be a positive one, as we look ahead to another busy day of economic data," Hewson added.
UK Prime Minister Boris Johnson has told European business leaders he wants to "foster a pro-business agenda" with Brussels after MEPs signed-off on his Brexit trade deal, No 10 said.
The European Parliament overwhelmingly voted to ratify the trade terms last week, in a move that was delayed due to cross-Channel rows over the Northern Ireland Protocol. The deal, thrashed out by Johnson's government and the EU over months of difficult negotiations, was approved by MEPs by 660 votes to five, with 32 abstentions.
Following the move, Downing Street said Johnson and International Trade Secretary Liz Truss, during a conference call with businesses from the European Round Table for Industry on Tuesday afternoon, expressed hope the decision would bolster trade between Britain and the bloc.
The deal had been applied provisionally since January 1 but required the approval of MEPs before it could be ratified.
The pound was quoted at USD1.3902 early Wednesday, up from USD1.3871 at the London equities close Tuesday.
The euro was priced at USD1.2017, flat against USD1.2015. Against the yen, the dollar was trading at JPY109.30, little changed from JPY109.33.
Brent oil was quoted at USD69.32 a barrel Wednesday morning, up from USD68.46 a barrel late Tuesday. Gold was priced at USD1,779.03 an ounce, lower from USD1,782.51.
The UK corporate calendar for Wednesday has full-year results from online clothing retailer boohoo while broadcaster ITV and insurer Direct Line put out first-quarter results, with lender Virgin Money UK releasing interims.
In Wednesday's economic calendar, there are PMIs from Germany and the eurozone at 0855 BST and 0900 BST respectively, and then there are eurozone producer prices at 1000 BST. In the US, ADP employment figures are at 1315 BST, the services PMI is at 1445 BST, and the ISM services PMI print follows at 1500 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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