22nd Feb 2023 06:56
(Alliance News) - London was set to open lower on Wednesday, after US equities tumbled amid apprehension about interest rate increases ahead of the latest Federal Open Market Committee meeting minutes.
IG says futures indicate the FTSE 100 index of large-caps to open down 26.5 points, 0.3%, at 7,951.25 on Wednesday. The FTSE 100 ended down 36.56 points, or 0.5%, at 7,977.75 closing below 8,000 points for the first time since last Wednesday.
Sterling was quoted at USD1.2111 early Wednesday, lower than USD1.2121 at the London equities close on Tuesday. The euro traded at USD1.0659, lower than USD1.0673. Against the yen, the dollar was quoted at JPY134.81, up versus JPY134.74.
Stocks on Wall Street dropped sharply on Tuesday. The Dow Jones Industrial Average ended down 2.1%, the S&P 500 down 2.0% and the Nasdaq Composite down 2.5%.
The Federal Reserve releases minutes from its most recent policy meeting on Wednesday. The meeting was held on January 31 and February 1 and resulted in a 25 basis point US rate hike.
"In light of recent communications from Cleveland Fed President [Loretta] Mester and St Louis Fed President [Jim] Bullard revealed that at least a few officials supported continuing with 50bps increments in February, investors will be interested in signs of growing disagreement among officials about the appropriate path for a policy that lies ahead.," said SPI Asset Management's Stephen Innes.
In early corporate news, Rio Tinto reported a sharp drop in annual profit, as it followed mining peer BHP in scaling back shareholder payouts.
The Anglo-Australian company said pretax profit in 2022 was USD18.66 billion, dropping from USD30.83 billion a year before. Annual revenue came in at USD55.55 billion, down from USD63.50 billion.
Rio Tinto proposed a final dividend of USD2.25, compared to USD4.17 a year before, bring the annual total to USD4.92, down from USD7.93.
"Despite challenging market conditions, we remain resilient because of the quality of our assets, our great people and the strength of our balance sheet," said CEO Jakob Stausholm.
In Asia on Wednesday, the Nikkei 225 index closed down 1.3% in Tokyo. In China, the Shanghai Composite was down 0.5%, while the Hang Seng index in Hong Kong was down 0.3%. The S&P/ASX 200 in Sydney closed down 0.3%.
Gold was quoted at USD1,836.22 an ounce early Wednesday in London, down from USD1,837.01 late Tuesday. Brent oil was trading at USD82.59 a barrel, flat from USD82.73.
Ahead of the release of the US Fed meeting minutes on Wednesday, the economic calendar has a German inflation reading at 0700 GMT.
The corporate calendar in London has annual results from lenders Lloyds Banking and TBC Bank.
By Elizabeth Winter, Alliance News senior markets reporter
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