London stocks are expected to open slightly higher on Wednesday, with the FTSE 100 forecast to gain around 10 points as Asian markets recover from a technology-led sell-off and investors await key US inflation figures.
Futures indicate the FTSE 100 will open approximately 0.1% higher at 10,659, following Tuesday’s marginal decline of 5.95 points to 10,650.33.
Investor attention will turn to the latest US consumer price inflation figures, due at 13:30 BST, which could influence expectations for the Federal Reserve’s next interest rate decision.
Markets anticipate monthly inflation of 0.6%, pushing the annual rate to 3.6%, largely driven by higher energy costs. Core inflation is expected to edge up to 2.5% from 2.4%, suggesting underlying price pressures remain persistent.
Commerzbank analyst Volkmar Baur warned that inflationary pressures extend beyond rising fuel prices. According to the CME FedWatch Tool, markets currently assign a 79% probability that the Federal Reserve will leave interest rates unchanged at its next meeting.
Asian equities showed signs of recovery following Tuesday’s semiconductor sell-off. Japan’s Nikkei 225 gained 0.7%, Hong Kong’s Hang Seng rose 0.6%, and South Korea’s Kospi advanced 0.9% after previously plunging more than 5%.
However, China’s Shanghai Composite slipped 0.3%, while Australia’s S&P/ASX 200 declined 0.6%.
Wall Street closed lower on Tuesday, with the Dow Jones falling 0.4%, the Nasdaq Composite losing 0.2%, and the S&P 500 finishing marginally down.
Technology and semiconductor stocks remain under pressure, amid growing concerns over the profitability of artificial intelligence investment, rising financing costs and competition from Chinese technology companies.
SPI Asset Management analyst Stephen Innes said investors are increasingly questioning returns on AI infrastructure spending rather than simply focusing on demand growth.
European chipmaking equipment giant ASML provided a further industry update, forecasting fourth-quarter net sales of between €14.2 billion and €15.2 billion, compared with analyst expectations of approximately €14.19 billion.
US banking stocks also faced selling pressure following quarterly earnings announcements. JPMorgan declined 0.9%, Wells Fargo fell 3.1%, and Citigroup dropped 5.6%.
Attention now shifts to results from Bank of America and Morgan Stanley. Bank of America shares fell 2.3% in after-hours trading following a US Treasury announcement of penalties exceeding $1.2 billion relating to alleged anti-money laundering and sanctions violations.
In currency markets, sterling strengthened to $1.3272 against the dollar and €1.1838 against the euro, reaching its strongest level against the single currency since early June.
Brent crude increased to $106.29 a barrel, compared with $105.83 on Tuesday, while gold eased to $4,156.22 an ounce from $4,163.06.
US Treasury yields edged lower, with the benchmark 10-year yield slipping to 5.20% from 5.22%.
On the London corporate calendar, investors will be watching trading updates from asset manager Ashmore and recruitment group Robert Walters.
The US inflation report is expected to be the main market catalyst, with investors assessing whether persistent price pressures could keep American interest rates higher for longer and weigh on global equity sentiment.
