(Alliance News) - Equities in London are seen opening higher on Tuesday after US Federal Reserve chief Jerome Powell calmed inflationary nerves, affirming that recent consumer price growth has been down to "transitory" factors.
IG futures indicate the FTSE 100 index is to open 22.5 points, or 0.3%, higher at 7,084.79. The blue chip index closed 44.82 points higher, or 0.6%, at 7,062.29 on Tuesday.
In London, focus will be on UK public sector borrowing figures at 0700 BST. Figures from the Office for National Statistics in April showed the government's deficit reached GBP303.1 billion in the financial year to the end of March.
"With the easing of lockdown, it was still lower than the same month a year ago when April borrowing hit an eye watering GBP47.8 billion, but it was still the second-biggest April number ever, with the economy still in a partial state of lockdown, though restrictions were starting to get eased," CMC Markets analyst Michael Hewson commented.
"As we look to today's May numbers it's likely that we'll see a further improvement to GBP24.6 billion, which again would be over GBP20 billion lower than the same time a year ago, while tax receipts are also likely to be higher with more businesses open, albeit operating at a lower rate of activity."
Elsewhere, Tuesday's economic calendar has US existing home sales at 1500 BST. US Fed Chair Powell testifies before Congress at 1900 BST.
Asian markets recouped some of their losses from Monday. The mood there soured after a US Fed policymaker tipped the next interest rate hike in 2022.
The Nikkei 225 in Tokyo was 3.0% higher in late trade on Tuesday, while the S&P/ASX 200 in Sydney was up 1.6%. The two benchmarks were among those worst-hit on Monday.
In China, the Shanghai Composite was 0.7% higher, though the Hang Seng in Hong Kong was down 0.2%.
Fed Chair Powell, in prepared remarks ahead of a House hearing Tuesday, reiterated that the central bank will continue its supportive stance to ensure that the "sustained improvement" since the depths of Covid-19 pandemic is extended.
Powell acknowledged that inflation has "increased notably in recent months" due in part to higher oil prices and the hit from supply chain disruptions. But he restated that higher prices are due to "transitory" factors, adding that "inflation is expected to drop back toward our longer-run goal."
"All it took was a transitory inflation comment from Fed Chair Powell at prepared congressional testimony and a dovish comment from Fed President Williams, to swamp pseudo hawkish comments from Fed Presidents Bullard and Kaplan," OANDA analyst Jeffrey Halley commented.
In New York on Monday, the Dow Jones Industrial Average rose 1.8%, the S&P 500 gained 1.4% and the Nasdaq Composite ended up 0.8%.
The pound was quoted at USD1.3905 early on Tuesday morning in London, down from USD1.3915 at the equity market close on Monday. The euro stood at USD1.1902, down from USD1.1915. Against the yen, the dollar was trading at JPY110.43, up from JPY110.15.
Brent oil was quoted at USD75.07 a barrel early Tuesday in London, up from USD74.21 late Monday. Gold was quoted at USD1,782.75 an ounce, down from USD1,786.00.
The UK corporate calendar on Tuesday has annual results from recycled packaging firm DS Smith, recruiter Staffline and from industrial fastenings supplier Trifast. In addition, the latest UK grocery market share figures from Kantar will be released at 0800 BST.
By Eric Cunha; ericcunha@alliancenews.com
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