8th Jan 2025 06:52
(Alliance News) - London's FTSE 100 is set to tread water on Wednesday morning, ahead of US jobs data and Federal Reserve meeting minutes later.
Enthusiasm in global markets has been hurt by red-hot US data, which stoked inflation worries.
IG says futures indicate the FTSE 100 to open just 2.1 points lower, so largely flat, at 8,243.18 points on Wednesday. The index of London large-caps ended down 4.38 points, 0.1%, at 8,245.28 on Tuesday.
The pound was lower at USD1.2486 early Wednesday from USD1.2498 at the time of the London equities close on Tuesday. The euro fell to USD1.0354 from USD1.0377. Versus the yen, the dollar was higher at JPY158.05 from JPY157.77.
A barrel of Brent firmed to USD77.35 from USD76.83. Gold faded to USD2,651.71 an ounce from USD2,654.67.
Rising UK government borrowing costs grabbed investor focus on Tuesday. The yield on the 30-year gilt stretched as high as 5.24%, its loftiest level since 1998.
"While this comes against a backdrop of significant global fixed income supply this week, with participants stepping up a gear as 2025 gets underway, underperformance in gilts, compared to global peers, is again obvious," Pepperstone analyst Michael Brown commented.
The move in the bond market came after "strong US data sparked a broader hawkish market reaction", Brown added.
Strong US economic data on Tuesday complicated the picture for the Federal Reserve as it plots the path for interest rates in 2025.
According to the Institute for Supply Management, the services PMI registered 54.1 in December, rising from 52.1 in November, and above the 53.3 consensus forecast cited by FXStreet.
Of note, the prices index registered 64.4 in December, a sharp rise from November's reading of 58.2, sparking inflation worry.
ISM Chair Steve Miller noted this month's reading is the first time the index has registered over 60 since January. It was the highest reading since February 2023.
Wednesday's global economic diary sees minutes from December's Federal Open Market Committee meeting, and ADP private payrolls figures.
In Europe, there is a producer price index reading at 1000 GMT.
Numbers on Tuesday showed consumer price inflation in the eurozone hotted up last month.
According to Eurostat, eurozone headline inflation rose to 2.4% in December from 2.2% in November, with core inflation stabilising at 2.7%. The figures were in line with market expectations.
Also on the docket on Wednesday is German factory orders and retail sales data at 0700 GMT.
Equities in Asia were mixed but traded off session lows after a tepid morning. In China, the Shanghai Composite was up 0.2% in late dealings, after being in the red for most of the trading day. The Hang Seng Index was down 1.0%. In Tokyo, the Nikkei 225 shed 0.2%, while in Sydney, the S&P/ASX 200 added 0.8%.
In New York on Tuesday, the Dow Jones Industrial Average ended down 0.4%. The S&P 500 tumbled 1.1% and the Nasdaq Composite shed 1.9%.
Among UK corporate updates to come on Wednesday, oil major Shell reports its customary pre-earnings release quarterly update before its full fourth-quarter results scheduled for January 30. The local corporate calendar also has a trading statement from Topps Tiles.
By Eric Cunha, Alliance News news editor
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