11th Jun 2025 06:56
(Alliance News) - Stocks in London are set to open slightly lower on Wednesday, before a US inflation reading in the afternoon and following the development that a "framework" has been agreed in key trade talks between the world's two largest economies.
Also in focus in the afternoon will be a UK spending review outlined by the chancellor.
IG says futures indicate the FTSE 100 to open 11.7 points lower, 0.1%, at 8,841.38 on Wednesday. The index of London large-caps rose 20.80 points, 0.2%, to 8,853.08 on Tuesday.
Sterling fell to USD1.3484 early Wednesday, from USD1.3509 at the time of the London equities close on Tuesday. The euro traded at USD1.1417, largely unmoved from USD1.1418. Against the yen, the dollar advanced to JPY145.07 from JPY144.93.
The yield on the US 10-year Treasury was at 4.48% early Wednesday, where it stood at the time of the London equities close on Tuesday. The 30-year yield narrowed to 4.94% from 4.95%.
Top officials from the US and China said Tuesday they had agreed on a "framework" to move forward on trade, after two days of high-level talks in London to resolve tensions.
US Commerce Secretary Howard Lutnick expressed optimism that concerns surrounding rare earth minerals and magnets "will be resolved" as the deal is implemented.
But the framework will need to be approved by leaders in Washington and Beijing, officials said after a full day of talks at the UK capital's historic Lancaster House.
"Attention now shifts to today's US consumer price index report, which could provide further guidance on the Federal Reserve's policy outlook ahead of next week's [Federal Open Market Committee] meeting and quarterly options expiry. A hawkish core inflation print could prompt traders to price out expected Fed rate cuts and weigh on risk assets—but for now, the trade talks remain the primary market driver," ActivTrades analyst Anderson Alves commented.
In Tokyo on Wednesday, the Nikkei 225 was 0.5% higher in late dealings. In China, the Shanghai Composite was also up 0.5%, while the Hang Seng Index in Hong Kong traded 1.0% higher. In Sydney, the S&P/ASX 200 was up 0.2%.
In New York on Tuesday, the Dow Jones Industrial Average rose 0.3%, while the S&P 500 and Nasdaq Composite each rose 0.6%.
Wednesday's global economic calendar has the US inflation reading at 1330 BST. According to consensus cited by FXStreet, the pace of consumer price inflation is expected to have accelerated to 2.5% in May from 2.3% in April.
Also on Wednesday, UK Chancellor Rachel Reeves will set out government spending plans. The announcement will be around 1230 BST.
The review, which will set out day-to-day spending plans for the next three years and capital spending plans for the next four, is expected to see boosts for the NHS, defence and schools.
Commerzbank analyst Michael Pfister commented: "Yesterday's data showed that the UK's real economy is not as stable as the strong growth figures for the first quarter suggested. This is a challenging situation for the chancellor of the exchequer, who must present her first spending review today. Further difficult decisions regarding savings and higher revenues will probably have to be made, which are likely to exacerbate the difficult economic situation in the coming months.
"Therefore, it should come as no surprise that the market is now pricing in significantly more interest rate cuts by the Bank of England this year than at the beginning of the year."
A barrel of Brent fell to USD66.84 on Wednesday morning, from USD67.82 at the time of the closing bell on the London Stock Exchange on Tuesday. Gold fetched USD3,338.91 an ounce, up from USD3,325.36.
The UK corporate calendar on Wednesday has full-year results from pub operator Fuller, Smith & Turner.
By Eric Cunha, Alliance News news editor
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