17th Sep 2024 06:37
(Alliance News) - Stocks in London are set to open higher on Tuesday, on the eve of a Federal Reserve interest rate decision, as the conviction that the US central bank will enact a 50 basis point rate cut grows.
IG says futures indicate the FTSE 100 to open 46.9 points higher, 0.6%, at 8,325.34 on Tuesday. The index of London large-caps rose 5.35 points, or 0.1%, at 8,278.44 on Monday.
The pound was quoted at USD1.3201 early Tuesday, up from USD1.3195 at the time of the London equities close on Monday. The euro stood at USD1.1123, rising from USD1.1119. Against the yen, the dollar was trading at JPY140.78, up slightly from JPY140.75.
In New York on Monday, the Dow Jones Industrial Average added 0.6%, the S&P 500 rose 0.1%, but the Nasdaq Composite fell 0.5%.
"A choppy day across the board, yesterday, as participants continued to fine-tune their expectations ahead of tomorrow’s eagerly-anticipated Federal Open Market Committee decision. My base case remains for a 25bp move, however market pricing remains finely balanced, with the overnight indexed swap curve at one point yesterday actually implying a greater likelihood of a larger 50bp cut," Pepperstone analyst Michael Brown commented.
According to the CME FedWatch Tool, there is a 69% chance the Fed cuts by 50 basis points on Wednesday. There is a 31% chance it cuts by 25 basis points.
A week ago, the odds of a 50 basis point cut stood at 34%.
The US economy is at an "important turning point," the top economic advisor to President Joe Biden said Monday, calling for safeguards to be put in place to protect gains made in the labour market, ahead of a key Federal Reserve interest rate decision.
Her remarks come just two days before the Fed is expected to announce its first interest rate cut for more than four years, as inflation eases towards its long-run target of 2%, and the labour market continues to cool.
"Today, we are at an important turning point," White House National Economic Advisor Lael Brainard told the Council on Foreign Relations in New York.
"Inflation is now back down close to pre-pandemic levels, and that means the focus needs to be on safeguarding the gains – the important gains – we've made in the labour market."
In Tokyo on Tuesday, the Nikkei 225 was down 1.7% after traders there returned to desks following a public holiday on Monday. Financial markets in Shanghai are closed on Tuesday. In Hong Kong, the Hang Seng was up 1.5%. In Sydney, the S&P/ASX 200 traded 0.3% higher, hitting another record high.
The price of gold nudged down to USD2,575.83 an ounce on Tuesday morning in London, from USD2,579.31 at the time of the European equities close on Monday. Brent oil was quoted at USD73.05 a barrel, rising from USD72.49.
Tuesday's local corporate calendar sees half-year results from B&Q and Screwfix owner Kingfisher.
The global economic calendar for Tuesday has US retail sales data at 1330 BST and US industrial production numbers at 1415 BST.
After weeks of fierce political horse-trading, European Commission chief Ursula von der Leyen is expected on Tuesday to unveil her new top team to help steward the EU through the next five years of global uncertainty.
As part of the bloc's careful balancing act, the German head of the EU executive must choose the line-up for her second term from nominees put forward by the other 26 member states.
That has meant treading a political tightrope between the demands of competing national leaders – and putting some noses out of joint.
The highest-profile casualty so far has been France's first choice candidate Thierry Breton, who quit suddenly as internal market commissioner on Monday accusing von der Leyen of pushing Paris to ditch him.
By Eric Cunha, Alliance News news editor
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