London stocks are expected to open modestly lower on Wednesday as investors await key inflation data from the UK and the latest interest rate decision from the US Federal Reserve.
Futures indicate the FTSE 100 will open around 15 points lower at 10,479.61 after the index gained 0.6% on Tuesday to close at 10,494.21.
Market participants are focusing on a packed economic calendar, with UK inflation figures due before the opening bell. Economists expect consumer price inflation to have risen 0.4% in May, slowing from the 0.7% increase recorded in April. Producer price data and the latest retail price index figures will also be closely watched for clues on the direction of future Bank of England policy.
Later in the day, attention will shift to the United States where investors will receive retail sales figures, crude oil inventory data and the Federal Reserve’s latest interest rate announcement.
Despite renewed geopolitical tensions in parts of the Middle East, broader market sentiment remains supported by progress towards a formal US-Iran agreement. Negotiations on a permanent settlement are expected to begin following a signing ceremony in Switzerland on Friday, with discussions set to cover Iran’s nuclear programme and the potential lifting of sanctions.
Although fresh violence in southern Lebanon has highlighted ongoing regional risks, oil markets continued to focus on improving supply prospects. Brent crude traded at $79.39 per barrel, extending its decline below the $80 level as Iranian oil exports resumed for the first time in two months following the easing of restrictions in the Gulf.
Lower oil prices have helped reduce inflation concerns and improved expectations that central banks may face less pressure to tighten monetary policy further.
In corporate and economic developments, Prime Minister Keir Starmer announced £1.3 billion of investment from French and Indian companies into UK clean energy and artificial intelligence projects. The investments are expected to create more than 1,400 jobs across Manchester, Leeds and Birmingham.
Asian markets were generally positive overnight. Japan’s Nikkei 225 rose 0.7% after stronger-than-expected trade data showed exports increasing 17% year-on-year, while Australia’s ASX 200 gained 0.6% following evidence of a recovery in household spending.
Wall Street delivered a mixed performance on Tuesday, with the Dow Jones Industrial Average rising 0.6%, while the S&P 500 fell 0.6% and the Nasdaq Composite declined 1.2% as investors took profits in some technology stocks following recent strong gains.
Gold edged higher to $4,332 per ounce as investors sought some defensive exposure ahead of the Federal Reserve’s policy decision.
