(Alliance News) - Stocks in London were called flat on Tuesday morning, unable to take inspiration from the rally on Wall Street, while stocks in China remained volatile after Xi Jinping was handed a third term as national leader on Sunday.
In the UK, focus will be on the new prime minister, Rishi Sunak, with attention on Tuesday turning to who will fill his Cabinet.
IG says futures indicate the FTSE 100 index of large-caps to open up 3.91 points, or 0.1%, at 7,017.90 on Tuesday. It closed up 44.26 points, or 0.6% at 7,013.99 on Monday.
Sunak is expected to address the nation just before noon, before entering No 10 as the UK's first Hindu prime minister, the first of Asian heritage, and the youngest for more than 200 years at the age of 42.
The former chancellor will then turn his attention to assembling a top team that he will hope can return a measure of stability to both the Conservatives and the country.
"Markets are hoping that the coronation of Rishi Sunak as the next UK prime minister will help draw a line under the events of recent days, as the new PM elect warned his party that they needed to unite or die. This may prove to be a tall order, given the Tories propensity for fratricide over the years," CMC Markets analyst Michael Hewson said.
"Given recent events it's likely that the old divisions may well reassert themselves in the coming days, as things settle down, or if the polls don't improve; however given recent events it would be quite something to see an immediate rebound in the government's political fortunes."
In China, the Shanghai Composite and the Hang Seng index in Hong Kong were both up 0.1%, giving back stronger gains made earlier in the session. The Japanese Nikkei 225 index was up 1.1%.
Hong Kong and Shanghai stocks saw big swings on Tuesday following the previous day's rout, after Xi tightened his grip on power in China. Shanghai had closed down 2.0% on Monday, while the Hang Seng had lost 6.7%.
Investors were keeping a wary eye on developments in China after Xi at the weekend was handed another five-year term as leader and gave top jobs to a number of loyalists who back his strict zero-Covid strategy.
HSBC was 2.6% lower in Hong Kong, after the China-focused bank reported a decline in profit and revenue in the third quarter.
In the three months to September 30, HSBC reported pretax profit of USD3.15 billion, down 42% from USD5.40 billion a year before.
"We maintained our strong momentum in the third quarter and delivered a good set of results. Our strategy produced good organic growth in all three global businesses, and net interest income increased on the back of rising interest rates. We retained a tight grip on costs, despite inflationary pressures, and remain on track to achieve our cost targets for 2022 and 2023," Chief Executive Noel Quinn said.
Net interest income improved to USD8.58 billion from USD6.61 billion, but net fee income fell to USD2.78 billion from USD3.32 billion. Net insurance premium income slipped to USD2.66 billion from USD2.72 billion. As a result, revenue decreased by 3.2% to USD11.62 billion from USD12.01 billion.
In the US on Monday, stocks ended sharply higher, with the Dow Jones Industrial Average up 1.3%, the S&P 500 up 1.2%, and the Nasdaq Composite up 0.9%.
CMC's Hewson said: "The rebound in US markets appears to be being driven by an expectation that we may be close to a pause in the current pace of Fed rate rises, while US Treasury Secretary Janet Yellen said that she can't rule out the risk of a recession. That said, the continued resilience in US treasury yields suggests that bond markets have their doubts about a pause and that the Fed will probably push its luck until something snaps."
Sterling was quoted at USD1.1291 early Tuesday, marginally soft from USD1.1295 at the London equities close on Monday.
The euro traded at USD0.9874 early Tuesday, slightly lower than USD0.9877 late Monday. Against the yen, the dollar was quoted at JPY148.92, firm versus JPY148.82.
The S&P/ASX 200 stock index in Sydney closed up 0.3%.
Gold was quoted at USD1,649.40 an ounce early Tuesday, higher than USD1,648.76 on Monday evening in London. Brent oil was trading at USD91.19 a barrel, up from USD90.88 late Monday.
In the economic calendar, there is a US consumer confidence reading at 1400 BST after Bank of England Chief Economist Huw Pill speaks at 0900 BST.
In Tuesday's UK corporate calendar, IT infrastructure provider Softcat will issue its annual results, and Whitbread will post its half-year results.
By Paul McGowan; paulmcgowan@alliancenews.com
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