3rd May 2023 07:00
(Alliance News) - Stocks in London are set to recover some lost ground on Wednesday, as investors await the latest interest rate announcement from the US, due after the European market close.
IG says futures indicate the FTSE 100 index of large-caps to open up 29.0 points, 0.4%, at 7,802.03 on Wednesday. It closed down 97.54 points, or 1.2% at 7,773.03 on Tuesday, the first day back after a holiday weekend.
"European markets got off to a disappointing start to the week yesterday, after a collapse in energy prices knocked the stuffing out of the FTSE 100, pushing it to its lowest level since April 11," said CMC Markets' Michael Hewson.
Brent oil was trading at USD75.33 a barrel early Wednesday, weakening further from USD76.17 late Tuesday. It has fallen sharply from USD79.87 a barrel late Friday.
Oil major BP closed down 3.3% in London on Tuesday after reporting first quarter results.
Market focus for Wednesday is squarely on the US Federal Reserve, which is set to announce its latest interest rate decision at 1900 BST.
The market is expecting another 25 basis point hike, bring the target rate to 5.00% to 5.25%. The US central bank is then expected to halt its rate hiking cycle.
Equities in New York tumbled on Tuesday, as further jitters in the banking sector drove shares of regional banks lower, with blue-chip bank stocks also suffering.
Bank of America lost 3.0%, while Wells Fargo closed 3.9% lower.
"There doesn't appear to have been a clear catalyst for yesterday's rout in regional bank shares apart from rising nervousness about the effect future rate increases might have on financial stability," CMC's Hewson commented.
JPMorgan Chase on Monday said it had taken over the assets of First Republic Bank, after California regulators seized the troubled regional bank. First Republic Bank's 84 branches in eight states reopened on Monday as branches of JPMorgan Chase Bank.
The Dow Jones Industrial Average ended down 1.1% on Tuesday, the S&P 500 fell 1.2% and the Nasdaq Composite lost 1.1%.
The dollar was weaker in early exchanges in Europe before the rate announcement.
Sterling was quoted at USD1.2490 early Wednesday, higher than USD1.2463 at the London equities close on Tuesday. The euro traded at USD1.1022, higher than USD1.0986.
Against the yen, the dollar was quoted at JPY135.98, down from JPY136.55.
In Asia on Wednesday, the stock market in Japan was shut for Constitution Memorial Day. In Shanghai, the market remained closed as Labour Day continued in China. Hong Kong was open, and the Hang Seng index was down 1.8%. The S&P/ASX 200 in Sydney was down 1.1%.
Gold was quoted at USD2,015.59 an ounce early Wednesday, higher than USD2,011.85 on Tuesday.
In Wednesday's UK corporate calendar, there are trading statements from gambling firm Flutter Entertainment, homebuilder Barratt Developments, and GSK's consumer healthcare spin-off Haleon, and first-quarter results from Aston Martin.
In the economic calendar, in addition to the US interest rate announcement, the EU will publish its unemployment data at 1000 BST. There will also be two services PMI prints for the US from 1445 BST.
By Elizabeth Winter, Alliance News senior markets reporter
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