London equities are expected to open modestly higher on Wednesday, as markets move beyond recent concerns over the independence of the US central bank and turn their attention to a fresh round of US economic data.
According to IG, futures indicate that the FTSE 100 will open 9.4 points higher, or 0.1%, at 10,146.75. The index of London large-cap stocks closed marginally lower on Tuesday at 10,137.35.
Markets on Tuesday largely brushed aside renewed questions surrounding the independence of the Federal Reserve, while also taking a measured view of the December US consumer price inflation report and mixed quarterly earnings from JPMorgan Chase. Attention now shifts to the release later on Wednesday of US retail sales data and producer price inflation figures, which could provide further insight into the inflationary backdrop and interest rate outlook.
In currency markets, sterling was quoted at $1.3436 early on Wednesday, up from $1.3428 at the close of London trading on Tuesday. The euro edged higher to $1.1646 from $1.1638, while the dollar strengthened slightly against the yen to ¥159.33 from ¥159.17.
In New York, Wall Street ended Tuesday’s session lower. The Dow Jones Industrial Average fell 0.8%, the S&P 500 declined 0.2%, and the Nasdaq Composite slipped 0.1%.
US Treasury data released overnight showed that higher revenues from taxes and tariffs helped narrow the US budget deficit in the October-to-December period compared with a year earlier. The deficit fell 15% year-on-year to $602bn from $711bn, as total revenue rose 13% to $1.2tn while overall spending increased 2% to $1.8tn. Notably, receipts from individual income taxes increased sharply, while customs duties surged to $94bn in the first quarter of the fiscal year, up from $23bn a year earlier.
Asian markets were mixed on Wednesday. Japan’s Nikkei 225 rose 1.4%, while China’s Shanghai Composite slipped 0.3%. Hong Kong’s Hang Seng Index edged 0.3% higher, and Australia’s S&P/ASX 200 closed up 0.1%.
In commodities, gold was quoted at $4,627.40 an ounce early on Wednesday, up from $4,598.33 on Tuesday. Brent crude oil, supported by rising tensions involving Iran, was trading at $65.20 a barrel, slightly below $65.65 late on Tuesday.
Political tensions also remained elevated after Donald Trump called on Iranians to continue nationwide protests and take control of state institutions as authorities intensified their crackdown on mass demonstrations.
