The FTSE 100 is expected to open around 22 points higher at 10,677 on Tuesday, after closing 1% higher at 10,656.28 on Monday.
Global technology shares remain under pressure, with investors questioning stretched AI-related valuations and the impact of persistently high interest rates.
Wall Street finished mixed on Monday, with the Dow up 0.4%, S&P 500 down 0.1% and Nasdaq falling 0.4%.
Asian technology stocks also weakened, with Japan’s Nikkei down sharply as trading resumed after Monday’s holiday.
Bond markets provided some relief.
The US 10-year Treasury yield eased towards 5.2%, while the 30-year yield also retreated, reducing some of the valuation pressure that has weighed on equities in recent sessions.
JPMorgan, Goldman Sachs, Citigroup and Wells Fargo report on Tuesday, followed by Bank of America and Morgan Stanley on Wednesday.
Investors will be looking particularly at trading revenues, lending growth, deposit costs and whether higher Treasury yields are beginning to constrain dealmaking and credit demand.
Brent crude fell to around $105.35 a barrel from $106.60, as prospects for additional Russian diesel supply partially offset continued concern over attacks on Gulf infrastructure and regional shipping risks.
Middle East tensions nevertheless remain elevated following repeated Houthi attacks on Saudi Arabia and the prospect of greater US involvement in the conflict.
The International Monetary Fund has raised its 2026 global growth forecast to 3.1%, saying investment linked to artificial intelligence and resilience in advanced economies have helped offset some of the impact from high energy prices and geopolitical disruption.
For the UK, the IMF now expects GDP growth of 1.3% in 2026, but forecasts growth slowing to 1.2% in 2027.
It also expects UK inflation to average 3.3% this year and 2.8% in 2027, reflecting the impact of elevated energy costs and borrowing rates.
Sterling was slightly firmer at around $1.322, while gold recovered towards $4,192 an ounce.
For London investors, Tuesday’s main test is whether strong US bank earnings can offset continued pressure on technology stocks.
The larger macro catalyst remains US inflation later this week, with another strong reading likely to reinforce expectations that interest rates remain elevated and keep global bond yields under pressure.
Investor takeaway: The FTSE 100 is expected to open around 0.2% higher on Tuesday as easing Treasury yields and softer oil offset weakness in global technology shares. Attention now turns to third-quarter results from major US banks and later this week to US inflation data, while the IMF has raised its UK growth forecast but also lifted its inflation outlook.
