19th Jan 2022 06:53
(Alliance News) -Â Stock prices in London are set to open lower on Wednesday ahead of a raft of inflation readings from the UK, Germany, Ireland and Canada, as investors show jitters over the outlook for central bank policy tightening.
IG says futures indicate the FTSE 100 index of large-caps to open down 31.35 points, or 0.4%, at 7,532.20 on Wednesday. The FTSE 100 closed down 47.68 points, 0.6%, at 7,563.55 on Tuesday.
"The return of US markets from their long weekend saw equity markets fall back sharply yesterday, as rising bond yields across the globe reflected growing market concern that central banks might have to hike rates and embark on quantitative tightening much more aggressively than had originally been priced," said Michael Hewson, chief market analyst at CMC Markets.
In the US on Tuesday, Wall Street ended deep in the red on return from a long weekend, with the Dow Jones Industrial Average down 1.5%, the S&P 500 down 1.8%, and the Nasdaq Composite down 2.6%.
Those concerns will remain at the fore on Wednesday amid a deluge of inflation readings across the globe.
The economic events calendar on Wednesday has UK inflation data and ONS house price index readings at 0700 GMT and 0930 GMT respectively. German inflation is also due at 0700 GMT, while Irish inflation is at 1100 GMT and Canadian inflation at 1330 GMT.
The UK annual consumer price inflation rate is expected to tick up to 5.2% in December, according to FXStreet, after November's rate of 5.1%.
"With UK CPI expected to rise to match an 11-year high of 5.2%, when the December inflation numbers are released later this morning, and with further increases in prices forecast in the coming weeks, a number of 5.3% would represent the highest level since April 1992," said CMC's Hewson.
Investors are already braced for four rate hikes from the Bank of England this year.
Sterling was quoted at USD1.3608 ahead of the data, higher than USD1.3583 at the London equities close on Tuesday.
UK Prime Minister Boris Johnson is expected to announce an easing of England's coronavirus restrictions as he battles to save his premiership.
Johnson and his cabinet will examine the latest Covid-19 data on Wednesday morning before making a statement in the Commons on Wednesday afternoon. England's Plan B measures – which include guidance to work from home, the use of the Covid pass and mandatory mask wearing in shops and on public transport – are set to expire on January 26.
Health Secretary Sajid Javid told MPs on Tuesday that he was "cautiously optimistic that we will be able to substantially reduce restrictions next week".
The euro was flat at USD1.1335 early Wednesday. Against the yen, the dollar fell to JPY114.28 versus JPY114.61.
In Asia on Wednesday, the Japanese Nikkei 225 index slumped 2.8%. In China, the Shanghai Composite was down 0.4%, while the Hang Seng index in Hong Kong was down 0.4%. The S&P/ASX 200 tumbled 1.0%.
Gold was quoted at USD1,814.04 an ounce early Wednesday, higher than USD1,812.88 on Tuesday. Brent oil was trading at USD88.39 a barrel, higher than USD87.22 late Tuesday.
The UK corporate calendar on Wednesday has trading statements from education publisher Pearson, pub chain JD Wetherspoon and construction firm Galliford Try. Fashion house Burberry Group posts third-quarter earnings.
Already out are half-year production figures from BHP. The miner reported a 12% annual fall in copper output but a 1% rise in iron ore production. BHP said the outlook for its 2022 copper production is trending toward the low end of its guidance range.
By Lucy Heming;Â [email protected]
Copyright 2022 Alliance News Limited. All Rights Reserved.
Related Shares:
BHP Group