27th Apr 2021 07:00
(Alliance News) - Stocks in London are set to open modestly higher on Tuesday, amid caution as the US Federal Reserve kicks off its two-day policy meeting.
IG says futures indicate the FTSE 100 index of large-caps to open up 6.48 points, or 0.1%, at 6,969.60 on Tuesday. The FTSE 100 index closed up 24.56 points, or 0.4%, at 6,963.12 on Monday.
"In spite of the strong finish for US markets yesterday and a subdued Asia session, today's European open looks set to be another subdued one as the latest Federal Reserve meeting gets under way, with little expectation of any distinct change of tone from what we saw in March, with the US dollar expected to come under further pressure in the short term," said Michael Hewson, chief market analyst at CMC Markets.
Ahead of Wednesday's US interest rate decision, the Bank of Japan overnight on Tuesday raised its growth forecasts for the world's third-largest economy, citing expected stronger demand, and left its ultra-loose monetary policy in place.
But it acknowledged that the outlook remains "highly unclear" and could change depending on how the still-raging coronavirus pandemic evolves and affects the domestic and international economy.
Still, it revised up its estimate for the 2020-21 fiscal year that ended on March 31, projecting the economy shrank 4.9%, compared with the 5.6% contraction it predicted in January. For the current fiscal year, it now expects 4.0% growth, against its January forecast of 3.9%, while it lifted its expectations for the fiscal year ending in March 2023 to 2.4%, from 1.8% previously.
The Japanese yen was a touch lower Tuesday. The dollar was quoted at JPY108.22, higher versus JPY108.18 late Monday in London.
In Tokyo, the Nikkei 225 index was down 0.3%. In China, the Shanghai Composite was down 0.3%, while the Hang Seng index in Hong Kong was up 0.2%. The S&P/ASX 200 in Sydney was down 0.2%.
Helping lift the Hang Seng index was HSBC, rising 2.2% after saying it started 2021 with a sharp jump in pretax profit, boosted by credit releases.
Pretax profit in the three months to March 31 improved 79% to USD5.78 billion from USD3.23 billion the year before. In the first quarter, HSBC's expected credit losses came out as a net release of USD400 million compared to the mammoth USD3.0 billion charge seen a year before.
The London-headquartered but Asia-focused bank reported growth from all regions, with Asia profit growing slightly to USD3.76 billion but European and North American operations swinging to profit from a loss a year before.
Also due on Tuesday are results from oil major BP, Premier Inn hotel owner Whitbread, and flexible office space provider IWG.
In the US late Monday, Tesla reported a surge in first-quarter earnings but shares fell after-hours in New York.
In the first quarter of 2021, Tesla posted revenue of USD10.39 billion, up 74% from USD5.99 billion in the first quarter of 2020. First quarter diluted GAAP earnings per share attributable to common stockholders was USD0.39 from USD0.02 last year.
Tesla reported in first-quarter vehicle deliveries of 184,800 Model 3 and Model Y cars, beating expectations and setting a record for the Palo Alto, California-based firm.
However, Nicholas Hyett, an analyst at Hargreaves Lansdown, commented: "Less positively, there's the complete lack of guidance around near-term production headwinds. A global shortage of computer chips is expected to limit production from all manufacturers in the immediate future, and Tesla won't be exempt. Given the ongoing importance of its production ramp up, it may even be more heavily impacted."
In the US on Monday, Wall Street ended mostly higher, with the Dow lagging. The Dow Jones Industrial Average ended down 0.2%, the S&P 500 up 0.2%, and the Nasdaq Composite up 0.9%.
Sterling was quoted at USD1.3894 early Tuesday, higher than USD1.3885 at the London equities close on Monday. The euro traded at USD1.2078, firm on USD1.2075 late Monday.
Gold was quoted at USD1,782.69 an ounce early Tuesday, rising from USD1,777.60 on Monday. Brent oil was trading at USD66.09 a barrel, higher than USD65.50 late Monday.
The economic calendar on Tuesday has a US monthly house price index print at 1400 BST.
By Lucy Heming; [email protected]
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