18th Oct 2022 07:00
(Alliance News) - London's FTSE 100, already bolstered by a reversal of the market-spooking mini-budget, is to open higher on Tuesday after a strong handover from Asia and New York.
IG says futures indicate the FTSE 100 index of large-caps to open 55.7 points, 0.8%, higher at 6,975.94 on Tuesday. It had closed up 61.45 points, or 0.9%, at 6,920.24 on Monday.
"European markets got off to a strong start yesterday, helped in no small part by a sharp decline in yields, after new UK Chancellor Jeremy Hunt took the proverbial salami slicer to the September mini budget of the previous Chancellor, Kwasi Kwarteng," CMC Markets analyst Michael Hewson commented.
"European markets look set to open higher, with Asia markets also enjoying a positive session despite China taking the decision to delay its Q3 GDP and September retail sales and trade numbers. This seems a strange decision given that they are unlikely to be as bad as the Q2 numbers, unless Chinese authorities don't want them to overshadow the 20th National Congress which is taking place right now."
China's statistics agency delayed the release of gross domestic product data on Tuesday. It has not yet given a new data for the release. The delay coincides with Chinese Communist Party congress, where President Xi Jinping is expected to be handed a third term as party boss.
The Shanghai Composite was down 0.1% in China, though the Hang Seng in Hong Kong was 1.2% higher. In Tokyo, the Nikkei 225 was 1.5% higher in late trade.
In New York overnight, the Dow Jones Industrial Average closed up 1.9%, the S&P 500 added 2.7% while the Nasdaq Composite jumped 3.4%.
The pound edged back below the USD1.14 mark. Sterling fetched USD1.1380 early Tuesday UK time, down from USD1.1409 late Monday.
UK Prime Minister Liz Truss will hope openly apologising for "mistakes" in her tumultuous early premiership will pacify restless Tory colleagues as she seeks to fight on for another day in number 10.
She will rally her Cabinet at a meeting on Tuesday following an informal reception with senior ministers over drinks and nibbles in Downing Street on Monday evening.
Truss has suggested she believes she can weather the storm that has rocked the party in recent weeks, as she vowed to lead the Tories into the next general election.
Elsewhere, the Bank of England will delay a planned sale of gilts as it looks to restore more order to bond markets, which were hit by volatility after the mini-budget, the Financial Times reported on Tuesday.
The BoE had already delayed the sale of GBP838 billion worth of gilts bought under its quantitative easing scheme to the end of this month. It had been due to begin earlier in October.
In Sydney, the S&P/ASX 200 was 1.7% higher.
Reserve Bank of Australia policymakers believe there are more interest rate hikes to come, and its current cash rate target is not high enough, minutes from its latest meeting showed.
During the policy meeting earlier this month, the Australian central bank lifted rates by 25 basis points, slowing the pace of tightening following four 50bp rises on-the-trot. The latest increase took the cash rate target to 2.60%.
It was a decision which led to hope that the RBA and other major central banks will begin to ease off the monetary policy brake pedal.
The RBA noted this as one of the arguments against the eventual 25 basis point hike.
"If the board were to reduce the size of the rate increase, it would be the first to do so among advanced economies. This might in turn prompt an unhelpful reaction in inflation expectations and financial markets, if the community came to question the board's resolve to reduce inflation. Ultimately, if upside risks to inflation were to materialise, or the credibility of the path to reduce inflation came into question, it would be costly to re-establish low inflation," the minutes read.
Rio Tinto shares were 0.1% higher in late trade in Sydney. The miner slightly toned down annual guidance and warned of "downside risks to demand" for commodities on Tuesday.
Rio now expects 2022 Pilbara iron ore shipments in the bottom end of a 320 million to 335 million tonnes range. Shipments of 322 million tonnes were achieved in 2021.
In the third quarter of 2022, Pilbara iron ore shipments fell 1% annually to 82.9 million tonnes. Output climbed 1% to 84.3 million tonnes.
The euro traded at USD0.9858 early Tuesday in London, up from USD0.9810 late Monday. Against the yen, the dollar improved to JPY148.83 from JPY148.77.
A barrel of Brent oil rose to USD92.27 from USD91.70. An ounce of gold fell to USD1,658.09 from USD1,661.00.
In the international economics events calendar on Tuesday, there is a US industrial production reading at 1415 BST.
In the local corporate calendar, there is a trading statement from gambling firm 888 Holdings and private bank Arbuthnot Banking, while home construction firm Bellway will issue annual results.
In the US, there are quarterly figures from Goldman Sachs, Johnson & Johnson, United Airlines and Netflix.
By Eric Cunha; [email protected]
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