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LONDON MARKET EARLY CALL: Tepid start seen ahead of CPI data, US banks

(Alliance News) - Stocks in London are set for a subdued start on Wednesday as investors await ...

Alliance News 13 October, 2021 | 7:01AM
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(Alliance News) - Stocks in London are set for a subdued start on Wednesday as investors await inflation data and the start of US banking earnings season.

IG says futures indicate the FTSE 100 index of large-caps to open up 1.37 points at 7,131.60 on Wednesday. The FTSE 100 closed down 16.62 points, or 0.2%, at 7,130.23 on Tuesday.

The muted start in London follows modest falls in the US and Asia overnight as investors await key inflation data.

In the US on Tuesday, the Dow Jones Industrial Average ended down 0.3%, the S&P 500 down 0.2% and the Nasdaq Composite down 0.1%.

Due at 1330 BST, a US inflation reading for September is expected to show annual consumer price growth remained stable at 5.3% year-on-year.

"European markets are likely to take their cue from Wall Street and open slightly lower," said Jeffery Halley, senior market analyst at Oanda, adding that stocks in New York will be "beholden to the US inflation data".

The data comes after a Federal Reserve official said Tuesday the US is nearly ready for the central bank to pull back on its stimulus, and the high inflation may soon retreat.

The Fed last month signalled it would "soon" be ready to begin the process of ending its massive monthly purchases of bonds and other securities intended to help the country weather the Covid-19 downturn.

In a speech to the Institute of International Finance, Fed Vice Chair Richard Clarida said the world's largest economy was nearing completion of the "substantial further progress" test the central bank has set to determine when to back off its stimulus policies.

Fed minutes are due on Wednesday at 1900 BST.

The mood was still subdued in Asia overnight, with the Japanese Nikkei 225 index down 0.1%. In China, the Shanghai Composite was up 0.1%, while trading in Hong Kong was suspended due to a typhoon. The S&P/ASX 200 in Sydney was down 0.1%.

China's exports rose unexpectedly in September, official data showed Wednesday, despite fears that a recent power crunch in the country might hamper production.

Exports rose a better-than-expected 28% on-year in September, according to customs authorities – up from 26% in August. However, imports missed predictions and rose 18%, just over half as much as the previous month's increase.

Still to come in Wednesday's economic calendar is UK GDP at 0700 BST and German inflation at the same time.

Ahead of the readings, sterling was quoted at USD1.3610 early Wednesday, up from USD1.3595 at the London equities close on Tuesday. The euro traded at USD1.1550, firm against USD1.1544 late Tuesday. Against the yen, the dollar advanced to JPY113.48 versus JPY113.34.

Gold was quoted at USD1,762.32 an ounce early Wednesday, flat against USD1,763.12 on Tuesday. Brent oil was trading at USD83.32 a barrel, softening from USD83.50 late Tuesday.

The UK corporate calendar on Wednesday has third-quarter results from education publisher Pearson and recruiter PageGroup.

Shares in online retail platform THG will be in focus on Wednesday, after the stock fell 35% on Tuesday. Better known as The Hut Group, the company held its first capital markets day since it listed in September 2020.

The meeting was meant to reassure shareholders after a tough month for the firm's share price. But instead it spooked them. The drop started at around 3pm on Tuesday afternoon.

THG is facing concerns over proposals to spin off its beauty arm, and about its tech platform.

And in focus in the US is the kick-off of banking earnings season, with JPMorgan Chase reporting third-quarter results.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
THG PLC Ordinary Share 172.70 -

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