London markets are expected to rebound on Wednesday, with investors continuing to assess the political fallout in Westminster alongside persistent concerns over elevated US inflation.
FTSE 100 futures point to a rise of 57.8 points, or 0.6%, to 10,323.12. The benchmark index closed marginally lower at 10,265.32 on Tuesday.
UK government bonds are likely to remain under close scrutiny after gilt yields surged amid intensifying pressure on Prime Minister Keir Starmer.
The 30-year gilt yield remained at its highest level this century, while the benchmark 10-year yield briefly climbed to its highest point since 2008 before easing slightly by the close.
Political tensions escalated after Starmer openly challenged critics within the Labour Party to mount a formal leadership bid, following ministerial resignations and growing calls for him to step down.
Attention is now focused on a key meeting between Starmer and Health Secretary Wes Streeting, who has emerged as a potential leadership contender. The prime minister is also expected to use Wednesday’s State Opening of Parliament to reinforce the government’s legislative agenda, with King Charles III set to outline a series of proposed laws.
Currency markets stabilised slightly overnight, with sterling recovering modest ground against both the US dollar and euro.
On Wall Street, US markets ended mixed on Tuesday as investors reacted to hotter-than-expected inflation data. The Dow Jones Industrial Average edged 0.1% higher, while the S&P 500 and Nasdaq Composite declined.
US President Donald Trump attempted to calm market concerns, arguing that rising inflation was temporary and largely linked to the conflict involving Iran.
Trump also confirmed he would travel to Beijing on Wednesday evening for high-level talks with Chinese President Xi Jinping. Discussions are expected to cover trade, artificial intelligence, Taiwan and the Middle East conflict, with several leading US technology executives reportedly joining the delegation.
Oil prices eased slightly but remained elevated, with Brent crude trading at USD106.12 per barrel early Wednesday.
Asian markets traded mixed overnight. Japan’s Nikkei 225 rose 0.8%, China’s Shanghai Composite gained 0.4%, while Hong Kong’s Hang Seng was little changed. Australia’s S&P/ASX 200 fell 0.4%.
Meanwhile, gold prices moved higher as investors continued to seek defensive assets amid geopolitical and political uncertainty, with bullion trading near USD4,700 per ounce.
